Yahoo Finance Shaw (SJR) Down 4.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Shaw Communications (SJR). Shares have lost about 4.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Shaw due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Shaw Communications Q4 Earnings Miss, Revenues Beat
Shaw Communications reported fourth-quarter fiscal 2022 adjusted earnings from continuing operations of 26 cents per share, missing the Zacks Consensus Estimate by 3.7%.
Total revenues came in at $1.051 billion, beating the consensus mark by 4.5%.
In domestic currency, SJR reported earnings of C$0.34 per share, down 41.4% year over year. Total revenues decreased 1.5% year over year to C$1.35 billion.
As previously disclosed, in order to permit continued engagement with the pending regulatory approval processes and related hearings, Rogers Communications , Shaw and the Shaw Family Living Trust have agreed to extend the outside date for closing the Rogers-Shaw Transaction from Jul 31, 2022 to Dec 31, 2022 which may further be extended to Jan 31, 2023 at the option of Rogers or Shaw, demonstrating their commitment to completing this transformative combination.
Segmental Update
Wireline revenues (76.3% of total revenues) dropped 2.4% on a year-over-year basis to C$1.03 billion. Wireline customers declined by roughly 40,350 in the reported quarter compared with a loss of nearly 45,387 in the year-ago quarter.
Wireline - Consumer revenues fell 3.4% to C$879 million as Internet revenue growth was offset by declines in Video, Satellite and Phone subscribers and revenues. Wireline - Business revenues of C$155 million were up 4% year over year.
Wireless revenues (24% of total revenues) increased 1.2% on a year-over-year basis to C$325 million.
In the fourth quarter, the company added 52,900 new Wireless customers. Postpaid net additions of approximately 25,600 in the quarter were down compared to the prior year due to wireless competition and moderating demand for Shaw Mobile, partially offset by increasing retail traffic for Freedom Mobile, although not yet to pre-pandemic levels.
Fourth quarter Wireless average revenue per user (ARPU) decreased 0.9% from the prior year period to $37.08. Wireless postpaid churn2 of 1.39% improved approximately 10 basis points (bps) from the fourth quarter of fiscal 2021.
The Wireless division added 52,862 net postpaid and prepaid subscribers in the quarter, consisting of 25,623 postpaid additions and 27,239 prepaid additions.
Wireless - Service revenues (76.9% of segment revenues) were up 7.3% from the year-ago quarter’s figure to C$250 million.
Wireless - Equipment revenues (23.1% of segment revenues) fell 14.8% year over year to C$75 million.
Operating Details
In fourth-quarter fiscal 2022, adjusted EBITDA rose 1.6% year over year to C$624 million. Adjusted EBITDA margin expanded 140 basis points on a year-over-year basis to 46%.
Segment-wise, Wireline’s adjusted EBITDA dropped 1.4% to C$501 million. The Wireline segment’s adjusted EBITDA margin expanded 50 bps on a year-over-year basis to 48.5%.
Wireless adjusted EBITDA increased 16% to C$123 million. The Wireless segment’s adjusted EBITDA margin expanded 370 bps on a year-over-year basis to 49.2%.
Cash Flow Details
As of Aug 31, 2022, Shaw Communications had cash and cash equivalents of C$421 million. The company’s net debt position was C$4.55 billion.
Cash flow from operations for the quarter of C$487 million decreased 5.3% from C$514 million in the fourth quarter of fiscal 2021, primarily due to the decrease in net income and partially offset by a decrease in non-cash future income tax recovery.
Capital expenditures in the fourth quarter of C$340 million compared to C$292 million in the prior year.
Free cash flow for the quarter of C$70 million compared to C$227 million in the prior year. The decrease was largely due to higher capital expenditures and higher income taxes paid, partially offset by an increase in adjusted EBITDA.
At the end of fiscal 2022, the net debt leverage ratio was 2.2x, below management’s optimal range of 2.5X-3X.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Shaw has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Shaw has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Shaw Communications Inc. (SJR) : Free Stock Analysis Report
