Why Is Rogers Communication (RCI) Up 2.5% Since the Last Earnings Report?

It has been about a month since the last earnings report for Rogers Communication, Inc. RCI. Shares have added about 2.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Rogers Communications Q3 Earnings Beat, Revenues Miss

Net Income

Quarterly net income was approximately $372.66 million compared with $335.16 million in the year-ago quarter. Adjusted earnings per share of 81 cents were above the Zacks Consensus Estimate of 79 cents.

Revenue

Quarterly total revenue was around $2,856 million, up 7.5% year over year and below the Zacks Consensus Estimate of $2,897 million.

Operating Metrics

Adjusted operating profit was $1,167.47 million compared with $1,105.23 million in the year-ago quarter. Quarterly adjusted operating profit margin was 40.9% versus 39.7% from the year-ago quarter.

Cash Flow

During the reported quarter, Rogers Communications generated $1098.84 million of cash from operations compared with $945.63 million at the end of Jun 2016. Free cash flow was $429.32.12 million compared with $477.20 million in the year-ago quarter.

Liquidity

In the quarter under review, change in the cash and cash equivalents on Rogers Communications’ balance amounted $31.12 million. Total outstanding long-term debt was approximately $10,098.69million compared with $12,233.34 million at the end of Dec 2016.

WirelessSegment                                                                                           

Quarterly total revenue was around $1,706.12 million, up 5% year over year. Service revenues totaled $1,604.78 million, up 7% from the year-ago quarter. Equipment sales were $101.34 million, down 20% year over year.

Quarterly adjusted operating profit for the segment was $769.27 million, up 9% year over year. Adjusted operating profit margin was 47.9% compared with 47.1% in the year-earlier quarter.

Quarterly blended ARPU (average revenue per user) was $50.89, compared with $49.72 in the year-ago quarter. As of Jun 30, the prepaid subscriber base totaled 1.786 million, with a gain of 97,000 subscribers from the year-ago quarter. Monthly churn rate was 3.04% compared with 3.49% in the prior-year quarter.

As of Sep 30, 2017, Rogers Communications’ postpaid wireless subscriber base totaled 8.839 million. In the third quarter, the company added 129,000 postpaid wireless subscribers. Quarterly postpaid ARPA (average revenue per account) was around $128.54 compared with $121.39 in the year-ago quarter. The monthly churn rate was 1.16% versus 1.26% in the prior-year quarter.

Cable Segment

Quarterly total revenue totaled $694.26 million, up 1% year over year. Service revenues totaled $693.46 million, up 1% year over year. Internet revenues were $322.39 million, up 6% year over year. Television (Video) revenues were $300.85 million, down 3% year over year. Telephony revenues totaled $70.22 million, down 7% year over year. Equipment sales were $0.798 million, down 50% year over year.

Quarterly adjusted operating profit for the segment was $351.12 million, up 2% year over year. Adjusted operating margin was 50.6% compared with 49.8% in the year-ago quarter.

As of Sep 30, the high-speed Internet subscriber count was 2.213 million. Rogers Communications added 27,000 high-speed Internet customers in the quarter. Video subscriber base totaled 1.753 million, after a loss of 18,000 users. Telephony subscriber count was 1.099 million. The company lost 4,000 telephony subscribers from the year-ago quarter.

MediaSegment                                                                                                       

Quarterly total revenue amounted $411.77 million, down 3% year over year. Quarterly operating expenses declined 1% year over year to $359.89 million. Adjusted operating profit margin came in at 12.6% versus 14.8% with the year-ago quarter.

Business Solutions Segment

Quarterly total revenue totaled $77.41 million, up 2% year over year. Of the total, next-generation revenues were $64.64 million, up 5%. Legacy revenues were $11.17 million, down 18%. Service revenues were $75.81 million, up 1%. Equipment revenues were $1.59 million. Quarterly adjusted operating profit was $26.33 million, up 6% year over year. Adjusted operating margin was 34.0% compared with 32.6% in the year-ago quarter.

How have estimates been moving since then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

Rogers Communication, Inc. Price and Consensus

 

Rogers Communication, Inc. Price and Consensus | Rogers Communication, Inc. Quote

VGM Scores

At this time, Rogers Communication's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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