Rogers Communications Stock Should Be Launching Higher
2022.05.01 11:52
Canadian communications and media giant Rogers Communications (NYSE:RCI) stock made new all-time highs at $64.55 before pulling back down despite the relative weakness in benchmark indices.
The broadband provider is seeking to complete and integrate its buyout of Shaw Communications (NYSE:SJR), which it acquired for $26 billion in 2021, in the first half of fiscal 2022 pending final approvals from the ISED and Competition Bureau of Canada.
The Company is leading in 5G coverage and performance in Canada. Rogers Communications is hitting milestones in its 10G initiative by successfully testing 8 gigabit symmetrical, upload and download speeds over its fiber powered networks.
Prudent investors seeking exposure in the broadband communications and media segment in Canada can watch for opportunistic pullbacks in shares of Rogers Communications.
Q1 Fiscal 2022 Earnings Release
On Apr. 20, 2022, Rogers Communications released its fiscal first-quarter 2022 results for the quarter ending March 2022. The Company reported an earnings-per-share (EPS) profit of CAD0.91 excluding versus consensus analyst estimates for a profit of CAD0.83, beating estimates by CAD0.08.
Revenues rose 3.8% year-over-year (YoY) to CAD3.62 billion falling short of analyst estimates for CAD3.63 billion. The Company declared a 50 cents per Class B Non-Voting and Class A Voting share dividend.
Rogers Communications raised guidance for total service revenue to increase 6% to 8%, up from 4.6%. The Company expects adjusted EBITDA to rise 8% to 10%, up from $6% to 8%.
Conference Call Takeaways
Rogers Communications CEO Tony Staffieri outlined the three focus priorities which include better business execution across all segments, increased investments in customer service and network infrastructure, and successfully completing the Shaw acquisition in 1H 2022.
He detailed the progress made in the quarter on each of the priorities. Each of its segments delivered better than expected revenues and profitability by targeting the acceleration of efficiencies and process improvement opportunities.
The wireless service revenue climbed 7% YoY from improved churn and ARPU growth. Post-paid mobile phone added 66,000 with ARPU up 3% to $57.25. Cable revenues grew 2% and adjusted EBITDA rose 13%. Media revenues grew 10% with the return of in-stadium revenues from higher sports-related advertising.
The Company plans to spend $3 billion on infrastructure investment. CEO Staffieri commented,
“As you saw yesterday, we announced a major milestone in our 10G initiative, where we successfully tested 8 gigabit symmetrical, upload and download speeds on our fiber powered networks. Impressive by any standard, this technology will become available to customers in the not too distant future.”
The Company generated $800 million in cash flow from operations, up 20% driven by higher adjusted EBITDA.
Shaw Communications Acquisition
The Company received CRTC approval in March 2022 for its acquisition of Shaw Communications. The financing is completed from the debt offerings. The Company is waiting for approvals from two government bodies—ISED and Competition Bureau in Canada.
The Company believes these approvals will come through,
“…both the Rogers and Shaw teams believe the strength of this transaction is compelling for all stakeholders, especially Canadians. As we move forward, our Shaw acquisition will truly allow Rogers to accelerate innovation and drive competition nationally. Importantly, together with Shaw, we will have the necessary scale to meaningfully bridge the digital divide and do neither of us could do on our own.”
Rogers Communications Stock Chart
RCI Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for RCI stock. The weekly rifle chart peaked near the $64.65 Fibonacci (fib) level before falling sharply to the weekly 5-period moving average (MA) at $57.47.
The weekly 15-period MA is rising at $53.59. The weekly upper Bollinger® Bands (BBs) are at $62.56. The weekly stochastic peaked and crossed back down off the 100-band. The weekly 50-period MA support is at $50.59 and 200-period MA support sits at $48.75.
The weekly market structure low (MSL) buy triggered on the breakout through the $46.88 level. The daily rifle chart uptrend stalled as the 5-period MA starts to slope down at $59.06 on a flat 15-period MA at $58.38. The daily 50-period MA sits at $54.77 and lower BBs sit at $53.59.
The daily 200-period MA support sits at $50.19. The daily stochastic formed a mini inverse pup that fell through the 80-band oscillating down through the 60-band.
Prudent investors can watch for opportunistic pullback levels at the $55.87 fib, $54.71 fib, $52.70 fib, $52.26 fib, $51.39 fib, $50.02 fib, $47.90 fib, and the $46.77 fib level. Upside trajectories range from the $62.00 fib up towards the $72.73 fib level.
