It has been about a month since the last earnings report for Shaw Communications Inc. . Shares have lost about 1.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Shaw Communications Q2 Earnings In Line, Revenues Lag
Adjusted earnings per share came in at $0.23 in the second quarter of fiscal 2017 (ended Feb 28, 2017), exactly same as the Zacks Consensus Estimate. Net income was $111.13 million, reflecting a decrease of 10.4% from $123.98 million in the second quarter of fiscal 2016.
Total revenue came in at $986 million, reflecting an increase of 13.3% from $829 million in the year-ago quarter. However, the top line lagged the Zacks Consensus Estimate of $1,005 million
Operating Metrics
Second-quarter fiscal 2017 operating income before restructuring costs and amortization was $408.24 million, up 7.6% from $379.51 million in the fiscal second quarter of 2016. Operating margin came at 41.4%, down from 43.6% a year ago.
Cash Flow
In the second quarter of fiscal 2017, Shaw Communications generated $320.54 million of cash from continued operations compared with $274.43 million in the prior-year quarter. Free cash flow came in at $111.13 million versus $89.96 million in the year-ago quarter, reflecting an increase of 23.5%. Free cash flow increased on higher consolidated operating income before restructuring costs and amortization.
Liquidity
At the end of second-quarter fiscal 2017, Shaw Communications had cash and total outstanding debt of $468.72 million and $4,272.91 compared with $306.18 million and $4,033.26 million, respectively, at the end of Aug 2016.
Subscriber Statistics (As of Feb 28, 2017)
At the Consumer segment, the video cable customer base totaled 1,650,789,reflecting a net reduction of 7,124customers in the quarter under review. Video satellite customer count decreased 4,611to 770,294. Meanwhile, with the addition of 13,466customers in the quarter, the company's Internet base now stands at 1,818,072. Digital phone lines grossed 931,893, reflecting a sequential reduction of 7,025lines.
For the Business Network Service segment, the video cable customer base totaled 53,475, marking a net loss of 4,480 customers in the quarter. Video satellite customers increased by 1,041 to 32,000. Further, the company lost 3,856 Internet customers, taking the tally to 173,144. Digital phone lines grossed 312,384, reflecting a sequential addition of 5,692 lines.
In the Wireless Segment, the postpaid customer base totaled 714,917, marking a net addition of 33,582 customers from the previous quarter. The prepaid section however lost 155 customers from the prior-year quarter, taking the total to 371,268 customers.
The period, however, ended with 6,828,236 customers, inclusive of 1,086,185 Wireless subscribers. Consumer and Business Network Services saw a combined 6,897 RGU (revenue generating unit) decline in the quarter, marking a significant improvement from 51,495 RGU losses in the second quarter of fiscal 2016.
Consumer Segment
Quarterly revenues grossed $705.35 million in the fiscal second quarter, down 0.1% year over year from $706.10 million. Quarterly operating income before restructuring costs and amortization came in at $304.67 million, exactly the same as in the year-ago quarter. Operating margin was 43.2%, up from 43.1% in the second quarter of fiscal 2016.
Business Network Services Segment
Quarterly total revenue from the division was $110.38 million, up 6.6% year over year from $103.57 million. The segment’s quarterly operating income before restructuring costs and amortization was $55.19 million, up 10.6% year over year from $49.89 million. Operating margin came in at 50.0%, up from 48.2% from the second quarter of fiscal 2016.
Business Infrastructure Services Segment
Quarterly total revenue was $68.79 million, up 2.2% year over year from $67.28 million. Operating income before restructuring costs and amortization was $26.46 million, up 6.1% year over year from $24.95 million. Operating margin for the second quarter of fiscal 2017 was 38.5%, up from 37.1% in the comparable quarter a year ago.
Wireless Service Segment
Quarterly revenues from the newly acquired wireless segment was $105.84 million in the second quarter of fiscal 2017 while operating income before restructuring costs and amortization was $21.92 million. Operating margin came in at 20.7%.
Financial Outlook
The fiscal 2017 guidance remains the same as previously issued by Shaw Communications. Operating income before restructuring costs and amortization is expected to range between $2.125 billion and $2.175 billion and free cash flow is expected to exceed $400 million. Consolidated capital investment targets also remain unchanged from the previously provided guidance of $1.3 billion for the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There has been one downward revision for the current quarter.
VGM Scores
At this time, Shaw Communications' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Shaw Communications (SJR) Down 1.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Shaw Communications Inc. . Shares have lost about 1.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Shaw Communications Q2 Earnings In Line, Revenues Lag
Adjusted earnings per share came in at $0.23 in the second quarter of fiscal 2017 (ended Feb 28, 2017), exactly same as the Zacks Consensus Estimate. Net income was $111.13 million, reflecting a decrease of 10.4% from $123.98 million in the second quarter of fiscal 2016.
Total revenue came in at $986 million, reflecting an increase of 13.3% from $829 million in the year-ago quarter. However, the top line lagged the Zacks Consensus Estimate of $1,005 million
Operating Metrics
Second-quarter fiscal 2017 operating income before restructuring costs and amortization was $408.24 million, up 7.6% from $379.51 million in the fiscal second quarter of 2016. Operating margin came at 41.4%, down from 43.6% a year ago.
Cash Flow
In the second quarter of fiscal 2017, Shaw Communications generated $320.54 million of cash from continued operations compared with $274.43 million in the prior-year quarter. Free cash flow came in at $111.13 million versus $89.96 million in the year-ago quarter, reflecting an increase of 23.5%. Free cash flow increased on higher consolidated operating income before restructuring costs and amortization.
Liquidity
At the end of second-quarter fiscal 2017, Shaw Communications had cash and total outstanding debt of $468.72 million and $4,272.91 compared with $306.18 million and $4,033.26 million, respectively, at the end of Aug 2016.
Subscriber Statistics (As of Feb 28, 2017)
At the Consumer segment, the video cable customer base totaled 1,650,789,reflecting a net reduction of 7,124customers in the quarter under review. Video satellite customer count decreased 4,611to 770,294. Meanwhile, with the addition of 13,466customers in the quarter, the company's Internet base now stands at 1,818,072. Digital phone lines grossed 931,893, reflecting a sequential reduction of 7,025lines.
For the Business Network Service segment, the video cable customer base totaled 53,475, marking a net loss of 4,480 customers in the quarter. Video satellite customers increased by 1,041 to 32,000. Further, the company lost 3,856 Internet customers, taking the tally to 173,144. Digital phone lines grossed 312,384, reflecting a sequential addition of 5,692 lines.
In the Wireless Segment, the postpaid customer base totaled 714,917, marking a net addition of 33,582 customers from the previous quarter. The prepaid section however lost 155 customers from the prior-year quarter, taking the total to 371,268 customers.
The period, however, ended with 6,828,236 customers, inclusive of 1,086,185 Wireless subscribers. Consumer and Business Network Services saw a combined 6,897 RGU (revenue generating unit) decline in the quarter, marking a significant improvement from 51,495 RGU losses in the second quarter of fiscal 2016.
Consumer Segment
Quarterly revenues grossed $705.35 million in the fiscal second quarter, down 0.1% year over year from $706.10 million. Quarterly operating income before restructuring costs and amortization came in at $304.67 million, exactly the same as in the year-ago quarter. Operating margin was 43.2%, up from 43.1% in the second quarter of fiscal 2016.
Business Network Services Segment
Quarterly total revenue from the division was $110.38 million, up 6.6% year over year from $103.57 million. The segment’s quarterly operating income before restructuring costs and amortization was $55.19 million, up 10.6% year over year from $49.89 million. Operating margin came in at 50.0%, up from 48.2% from the second quarter of fiscal 2016.
Business Infrastructure Services Segment
Quarterly total revenue was $68.79 million, up 2.2% year over year from $67.28 million. Operating income before restructuring costs and amortization was $26.46 million, up 6.1% year over year from $24.95 million. Operating margin for the second quarter of fiscal 2017 was 38.5%, up from 37.1% in the comparable quarter a year ago.
Wireless Service Segment
Quarterly revenues from the newly acquired wireless segment was $105.84 million in the second quarter of fiscal 2017 while operating income before restructuring costs and amortization was $21.92 million. Operating margin came in at 20.7%.
Financial Outlook
The fiscal 2017 guidance remains the same as previously issued by Shaw Communications. Operating income before restructuring costs and amortization is expected to range between $2.125 billion and $2.175 billion and free cash flow is expected to exceed $400 million. Consolidated capital investment targets also remain unchanged from the previously provided guidance of $1.3 billion for the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There has been one downward revision for the current quarter.
Shaw Communications Inc. Price and Consensus
Shaw Communications Inc. Price and Consensus | Shaw Communications Inc. Quote
VGM Scores
At this time, Shaw Communications' stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.