Shares of Shaw Communications, Inc. SJR touched a 52-week low of $22.39 yesterday. Over the past six months, the company’s shares have lost over 10% value.
Ever since the company announced disappointing first-quarter fiscal 2015 financial results on Jan 14, 2015, its shares have decreased in value by 10%. Adjusted earnings per share in the reported quarter stood at 39 cents, falling short of the Zacks Consensus Estimate of 41 cents. GAAP net income from continuing operations was $203.1 million, down 7.3% year over year.
GAAP earnings per share stood at 41 cents against 45 cents in the year-ago quarter. On the other hand, total revenue in the quarter rose 2% year over year to approximately $1,161 million, lagging the Zacks Consensus Estimate of $1,204 million.
Additionally, earnings estimate revisions have also exhibited a negative trend. Over the past 60 days, the company witnessed negative estimate revisions for the current year leading to a decline in the Zacks Consensus Estimate of 6.8% to $1.51.
Stiff competition is resulting in persistent loss of video cable and video satellite customers. Also, in the previous quarter, the company lost a considerable number of digital phone line customers. In the first quarter of fiscal 2015, Shaw Communications lost 15,591 video and 17,980 video satellite subscribers. Digital phone line count stood at 1,374,735, reflecting a year-over-year reduction of 599 lines.
Moreover, considerable debt, escalating capital expenditures and deteriorating cash position may act as headwinds while moving ahead. Shaw Communications exited the fiscal first quarter with nearly $4,957 million debt, up 18.1% year over year. Moreover, the maturity of nearly $1.3 billion debt over the next four years will keep the company’s cash flow under pressure.
Shaw Communications currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Better-ranked stocks in this sector include Chunghwa Telecom Co., Ltd. CHT, Vonage Holdings Corp. VG and China Mobile Ltd. CHL. All these stocks sport a Zacks Rank #1 (Strong Buy).
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