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Rogers Communications (RCI) Q2 Earnings: What's in the Cards?

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Rogers Communications Inc. (RCI - Free Report) is set to release second-quarter 2018 results on Jul 19.

The company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 6.64%. In first-quarter 2018, earnings of 71 cents per share outpaced the Zacks Consensus Estimate of 60 cents.

Total revenues of $2.88 billion also surpassed the Zacks Consensus Estimate of $2.75 billion and increased 7.8% year over year. This was primarily attributed to robust performance of the wireless segment and a recovery in the media segment.

Notably, the stock has gained 1.4% over the past year against the 14% decline of the industry.

Let’s see how things are shaping up prior to this announcement.

Rogers Communications’ wireless and cable segment has been doing well with a significant increase in wireless and high-speed Internet subscribers. The company’s technology partnership with Vodafone is aiding it to improve expertise in 5G, IT, and network across consumer and enterprise. The collaboration with Ericsson will help Rogers to deploy 5G, which bodes well for the company.

Rogers Communications is expected to benefit from continuing strong demand for data by consumers and businesses. Improving Wireless penetration rate is anticipated to boost subscriber base.

We are positive about Rogers Communications' wireless growth from the rollout of 700 MHz LTE lower block spectrum and Internet of Things (IoT) as a service to business enterprises.

The rollout of lower block spectrum will provide better in-building penetration and rural LTE coverage. The IoT services include End-to-End Incident Management, Farm & Food Monitoring, and Level Monitoring to business enterprises.

However, Rogers Communications faces stiff competition in Canada from large incumbents like TELUS, BCE Inc. (BCE - Free Report) and other small regional carriers. Moreover, Shaw Communications’ decision to venture into the Canadian wireless market with the WIND Mobile acquisition raises competition for Rogers Communications.

Cable operations are also facing increased competition from BCE’s entry into cable TV services. Further, Rogers Communications, like many other cable companies, has lost viewers to video streaming service providers like Netflix (NFLX - Free Report) . In recent times, the viewership of traditional cable TV players has been significantly impacted by the popularity of on-demand online videos.

The company’s Media segment has been affected by continued softness in the advertising market. To remain competitive, Rogers Communications needs to invest heavily in new TV programs and channels. This may result in considerable cash drain thereby hurting liquidity.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Rogers Communications has a Zacks Rank #3 and Earnings ESP of -0.25%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here is a stock you may consider as our proven model shows that it has the right combination of elements to post an earnings beat this quarter.

Twitter, Inc. (TWTR - Free Report) sports a Zacks Rank #1 (Strong Buy) and has a Earnings ESP of +7.1%. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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