Shares of leading Canadian telecom service provider, TELUS Corporation TU, hit a 52-week low of $32.55 yesterday. Over the past six months, the company shares have declined by nearly 11%.
Ever since the company announced dismal fourth-quarter numbers on Feb 12, 2015 the company’s shares have lost nearly 6%. The company reported fourth-quarter adjusted earnings of 53 Canadian cents per share (42 cents per ADS), up 8.2% year over year but well below the Zacks Consensus Estimate of 48 cents. Total revenue came in at approximately $2,481 million, up 6.1% year over year. However, the figure missed the consensus mark of $2,581 million.
Additionally, earnings estimate revisions have also exhibited a negative trend. Over the past 30 days, the company witnessed negative estimate revisions for the current year leading to a decline in the Zacks Consensus Estimate of 6.7% to $2.08.
The company’s investments in Optik TV and Internet business are expected to reap favorable results for its Wireline segment. Further, the introduction of new shared data plans, the Customer First strategy and solid shareholder returns will likely work in favor of the company.
However, these positives might somewhat be mitigated by persistent access line erosion. In addition, heightened competition from national as well as regional players and prepaid subscriber churn are problems that need to be addressed going ahead.
This Zacks Rank #4 (Sell) stock is critical for the Canadian government as the carrier believes that the new wireless policy offers undue advantage to big foreign companies. The company has suggested the government to frame policies that require foreign carriers to build their own network and compete for the same quantum of spectrum with domestic players. The carrier also wants the government to initiate a competitive bidding process in case of an acquisition.
Stocks to Consider
Better-ranked stocks in this sector include Chunghwa Telecom Co., Ltd. CHT, Vonage Holdings Corp. VG and China Unicom (Hong Kong) Ltd. CHU. All these stocks sport a Zacks Rank #1 (Strong Buy).
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