Earnings Preview: Shaw Communications - Analyst Blog
January 07 2013 - 1:00PM
Zacks
Shaw Communications Inc. (SJR) is slated to
release its first-quarter fiscal 2013 results on Wednesday, January
9, before the opening bell. The Zacks Consensus Estimate for the
quarter is pegged at 45 cents down 1.86% from the year-ago
quarter.
With respect to earnings surprises, Shaw Communications has
outperformed the Zacks Consensus Estimate in three of the last four
quarters with an average beat of 3.82%.
Fourth Quarter Recap
On October 25, Shaw Communications reported its fourth-quarter
2012 financial results. Quarterly GAAP net income was approximately
$131.4 million or 28 cents per share compared with a net income of
$167 million or 37 cents per share in the prior-year quarter.
However, adjusted earnings per share (excluding special items) of
28 cents in the reported quarter beat the Zacks Consensus Estimate
by a penny.
Quarterly net revenue inched up 2.5% year over year to $1,196
million, surpassing the Zacks Consensus Estimate of $1,170 million.
Quarterly operating income before amortization climbed 4.2% year
over year to $495 million. Quarterly operating margin stood at
41.4% compared with 40.7% in the prior-year quarter.
Factors Impacting Earnings
Similar to the previous quarter the company continues to
struggle in its cable TV business. The company’s cable operation is
facing severe competition from IPTV service provider like
Telus Corp’s (TU) popular Optik TV which supports
over 400 digital channels and more than 100 HD channels.
However, in the reported quarter Shaw Communications has
performed impressively with respect to net customer additions on
several fronts. The company has improved on its EBITDA margin and
free cash flow due to the discontinuation of promotional
activities. Additionally, the acquisition of Canwest Global
Communications Corp. is expected to position the company as one of
the leading entertainment and communications companies in the
Canadian broadcasting industry.
Estimate Revisions
For fiscal 2013, in the last 30 days, out of the total 9
estimates, 2 estimates moved north while one moved south. For
fiscal 2014, out of the 7 estimates, 2 were revised upward, while
none moved downward over the same period. Estimates remained
unchanged at $1.59 and $1.65 for fiscal 2013 and 2014
respectively.
Our Recommendation
Shaw Communications launched “Shaw Go” – an innovative TV
Everywhere service, which will be available on Apple
Inc. (AAPL) developed iPad 2 and iPhone 5. Going forward,
the company will also offer streaming live TV, on-demand content
and several family-focused programs through Shaw Go.
Based on these considerations, we retain our long-term
Outperform recommendation on Shaw Communications. The company holds
a short term Zacks #2 Rank (Buy).
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