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Rogers Communication (RCI) Up 5.8% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Rogers Communication, Inc. (RCI - Free Report) . Shares have added about 5.8% in the past month, in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RCI due for a pullback? 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.
Recent Earnings
Rogers Communications delivered adjusted earnings of 71 cents per share that beat the Zacks Consensus Estimate by 11 cents. The figure jumped 40.6% from the year-ago quarter.
Total revenues of $2.88 billion also surpassed the Zacks Consensus Estimate of $2.75 billion and increased 7.8% year over year. This can be attributed to robust performance in the wireless segment and a recovery in the media segment.
Wireless Details
Wireless (60.3% of total revenues) increased 9.4% from the year-ago quarter to $1.73 billion. Service revenues climbed 5.2%, while equipment revenues soared 26.6% in the quarter.
Blended ARPU (average revenue per user) was C$53.68 up from $52.03 in the year-ago quarter but down from C$54.95 in the previous quarter.
As of Mar 31, the prepaid subscriber base totaled almost 1.72 million, a gain of 43K from the year-ago quarter but a loss of 60K subscribers at the end of fourth-quarter 2017. Monthly churn rate was 4.24% as compared with 3.74% in the year-ago quarter.
As of Mar 31, postpaid wireless subscriber base totaled roughly 8.79 billion, a subscriber gain of 182K from the year-ago quarter and 95K from the previous quarter. Monthly churn rate declined to 1.08% from 1.10% in the year-ago quarter and 1.20% in the previous quarter.
Rogers Communications continues to expand LTE coverage through the addition of latest generation 4.5G/5G-ready radio equipment. The company’s technology partnership with Vodafone is aiding it to improve expertise in 5G, IT, and network across consumer and enterprise.
Segment operating expense increased 7.2% from the year-ago quarter to $994.2 million.
Adjusted EBITDA surged 12.7% year over year to $738.7 million.
Cable Details
Cable (26.7% of total revenues) inched up 0.9% from the year-ago quarter to $766.5 million. Service revenues climbed 1.3%, while equipment revenues plunged 60%% in the quarter.
While Internet revenues increased 6.8%, television and phone revenues declined 2.7% and 9.4%, respectively.
As of Mar 31, 2018, the Internet subscriber count was nearly 2.35 million, a gain of 88K from the year-ago quarter and 26K from the end of the previous quarter.
Management stated that its offering of Ignite Gigabit Internet over the entire Cable footprint benefited top-line growth. Increasing demand for speed continues to be a growth driver, as 56% of residential Internet base are now on speeds of 100 Mbps or higher, up from 48% in the year-ago quarter.
Further, the company stated that Ignite TV trials have been completed and it expects a commercial launch later this year.
Rogers Communications lost 68K subscribers on a year-over-year basis and 12K subscribers sequentially to reach an installed base of almost 1.73 million in the Television segment.
Phone subscriber count was nearly 1.12 million, a gain of 21K from the year-ago quarter and 9K from the end of the previous quarter.
Segment operating expense decreased 1.5% from the year-ago quarter to $423.9 million.
Adjusted EBITDA increased 4.1% year over year to $342.5 million driven by favorable product mix shift toward higher margin Internet services.
Media Details
Media (14.6% of total revenues) increased 12.2% from the year-ago quarter to $420.8 million. Per management, revenue growth was driven by “higher distribution to the Toronto Blue Jays from Major League Baseball.”
Segment operating expense increased 1% from the year-ago quarter to $402.6 million.
Adjusted EBITDA was $402.6 million against a loss of $23.7 million in the year-ago quarter.
Consolidated Results
Operating costs increased 4.4% from the year-ago quarter to $1.82 billion. As percentage of revenues, operating costs declined 200 basis points (bps) to 63.1%.
Adjusted EBITDA increased 14% from the year-ago quarter to $1.06 billion. Adjusted EBITDA margin expanded 200 bps from the year-ago quarter, primarily owing to strong growth in revenues and improving cost structure.
Cash Flow Details
Cash provided by operating activities surged 48% year over year to C$885 million. Moreover, free cash flow increased 18% year over year to C$384 million.
Rogers Communications paid C$247 million in dividends and ended the first quarter with a debt leverage ratio (adjusted net debt / adjusted EBITDA) of 2.7.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
At this time, RCI has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. The stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, RCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Rogers Communication (RCI) Up 5.8% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Rogers Communication, Inc. (RCI - Free Report) . Shares have added about 5.8% in the past month, in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RCI due for a pullback? 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.
Recent Earnings
Rogers Communications delivered adjusted earnings of 71 cents per share that beat the Zacks Consensus Estimate by 11 cents. The figure jumped 40.6% from the year-ago quarter.
Total revenues of $2.88 billion also surpassed the Zacks Consensus Estimate of $2.75 billion and increased 7.8% year over year. This can be attributed to robust performance in the wireless segment and a recovery in the media segment.
Wireless Details
Wireless (60.3% of total revenues) increased 9.4% from the year-ago quarter to $1.73 billion. Service revenues climbed 5.2%, while equipment revenues soared 26.6% in the quarter.
Blended ARPU (average revenue per user) was C$53.68 up from $52.03 in the year-ago quarter but down from C$54.95 in the previous quarter.
As of Mar 31, the prepaid subscriber base totaled almost 1.72 million, a gain of 43K from the year-ago quarter but a loss of 60K subscribers at the end of fourth-quarter 2017. Monthly churn rate was 4.24% as compared with 3.74% in the year-ago quarter.
As of Mar 31, postpaid wireless subscriber base totaled roughly 8.79 billion, a subscriber gain of 182K from the year-ago quarter and 95K from the previous quarter. Monthly churn rate declined to 1.08% from 1.10% in the year-ago quarter and 1.20% in the previous quarter.
Rogers Communications continues to expand LTE coverage through the addition of latest generation 4.5G/5G-ready radio equipment. The company’s technology partnership with Vodafone is aiding it to improve expertise in 5G, IT, and network across consumer and enterprise.
Segment operating expense increased 7.2% from the year-ago quarter to $994.2 million.
Adjusted EBITDA surged 12.7% year over year to $738.7 million.
Cable Details
Cable (26.7% of total revenues) inched up 0.9% from the year-ago quarter to $766.5 million. Service revenues climbed 1.3%, while equipment revenues plunged 60%% in the quarter.
While Internet revenues increased 6.8%, television and phone revenues declined 2.7% and 9.4%, respectively.
As of Mar 31, 2018, the Internet subscriber count was nearly 2.35 million, a gain of 88K from the year-ago quarter and 26K from the end of the previous quarter.
Management stated that its offering of Ignite Gigabit Internet over the entire Cable footprint benefited top-line growth. Increasing demand for speed continues to be a growth driver, as 56% of residential Internet base are now on speeds of 100 Mbps or higher, up from 48% in the year-ago quarter.
Further, the company stated that Ignite TV trials have been completed and it expects a commercial launch later this year.
Rogers Communications lost 68K subscribers on a year-over-year basis and 12K subscribers sequentially to reach an installed base of almost 1.73 million in the Television segment.
Phone subscriber count was nearly 1.12 million, a gain of 21K from the year-ago quarter and 9K from the end of the previous quarter.
Segment operating expense decreased 1.5% from the year-ago quarter to $423.9 million.
Adjusted EBITDA increased 4.1% year over year to $342.5 million driven by favorable product mix shift toward higher margin Internet services.
Media Details
Media (14.6% of total revenues) increased 12.2% from the year-ago quarter to $420.8 million. Per management, revenue growth was driven by “higher distribution to the Toronto Blue Jays from Major League Baseball.”
Segment operating expense increased 1% from the year-ago quarter to $402.6 million.
Adjusted EBITDA was $402.6 million against a loss of $23.7 million in the year-ago quarter.
Consolidated Results
Operating costs increased 4.4% from the year-ago quarter to $1.82 billion. As percentage of revenues, operating costs declined 200 basis points (bps) to 63.1%.
Adjusted EBITDA increased 14% from the year-ago quarter to $1.06 billion. Adjusted EBITDA margin expanded 200 bps from the year-ago quarter, primarily owing to strong growth in revenues and improving cost structure.
Cash Flow Details
Cash provided by operating activities surged 48% year over year to C$885 million. Moreover, free cash flow increased 18% year over year to C$384 million.
Rogers Communications paid C$247 million in dividends and ended the first quarter with a debt leverage ratio (adjusted net debt / adjusted EBITDA) of 2.7.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Rogers Communication, Inc. Price and Consensus
Rogers Communication, Inc. Price and Consensus | Rogers Communication, Inc. Quote
VGM Scores
At this time, RCI has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. The stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, RCI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.