Shaw Communications stock jumps on upbeat Q1 earnings

Shaw Communications Inc. (SJR) reported a 68.5% jump in earnings for the first quarter helped by continued growth in Wireless, Business and Consumer Internet and the realization of cost-saving initiatives. The results exceeded analysts’ expectations. Following this, the stock inched higher by over 4% in the premarket session.

Net income climbed 68.5% to C$187 million and earnings jumped 64% to C$0.36 per share. Revenue grew 9% to C$1.36 billion.

Wireless revenue improved 60% to C$273 million on continued subscriber growth, the growing penetration of Big Gig data plans and higher equipment sales. Wireline revenue rose 0.7% to C$1.08 billion on contributions from rate adjustments and growth in Internet revenue as well as the continued demand for its SmartSuite of business products.

The company said continued momentum in Wireless supported by data-centric offerings resulted in strong postpaid Wireless subscriber additions of over 86,000 in the quarter and 12% year-over-year growth in average billing per subscriber unit to C$41.99. Wireless postpaid churn improved from 1.64% to 1.28% over the last year due to significant and ongoing enhancements to network and customer experience.

Companies reporting earnings this week: Jan 14 – 18

In the quarter, the company completed the launch of 140 new retail locations with Walmart (WMT) and is now operating in a combined total of about 240 national retail locations across its footprint with Loblaws’ “The Mobile Shop” and Walmart.

Looking ahead into fiscal 2019, Shaw confirmed that it remains on track to meet its guidance that includes operating income before restructuring costs and amortization growth of 4% to 6% over last year. Capital investments are still anticipated to be about C$1.2 billion and free cash flow is still predicted to be in excess of C$500 million.

The company’s guidance includes assumptions related to cost reductions that will be achieved through TBT initiatives that are expected to amount to C$140 million of operating and capital savings in fiscal 2019 (about C$85 million attributed to operating expenses and about C$55 million attributed to capital expenditures).

The company also expects to increase its market share in Western Canada as it expands its network into new cities throughout 2019, including Victoria and Red Deer, which are set to launch in the coming weeks.

Shares of Shaw ended Friday’s regular session up 1.08% at $19.69 on the NYSE. The stock has fallen over 9% in the past year while it has risen over 5% in the past three months.

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