I had been watching Rogers Communications (RCI.B) for a couple of months now. But once the stock started hitting $39 and $40 I felt it was overpriced and out of reach. I was waiting for a correction as a buy signal. So when Rogers missed earnings expectations today – big time, I was paying attention. In a previous article Bad News Investing ~ Profit from Crisis, I discussed how when companies get hit with bad news, it can be a great buy opportunity.
Today Rogers Communications Inc. (RCI.B-T) reported weak third quarter earnings, posting a profit drop of 24 per cent and a huge drop in new subscribers that plummeted below analysts’ expectations. Rogers, Canada’s largest wireless company, realized a profit of $370-million or 64 cents per share, compared to $485-million or 79 cents a year earlier, ( from the Globe and Mail ). In a highly competitive industry such as wireless communications, losing subscribership is a vital indicator. Rogers has been under fire from smaller competitors such as Mobilicity with anti-competition complaints.
With these new competitors on the horizon such as Wind Mobile, perhaps this is a wake-up call for Rogers (and the other telecom giants such as Bell and Telus) to be more competitive. The bottom line is Canadians are tired of being gouged on their cell phone bills, and the recent earnings decline for Rogers is most certainly a canary in the telecom industry. Telus has had numerous issues with its 3G networks, and also lost subscribers. Rogers, Bell, and Telus seem to be the leaders of the pack. Even with stiff competition in the wireless industry from smaller competitors, I think Rogers will still be in the top three for years to come.
Rogers currently has a P/E Ratio of 14.16, a dividend yield of 3.10%, and is currently trading at $38.41 per share. Roger’s has been through an exceptional run its share price since early 2009. The price is up a phenomenal 34.7% from its 52 week low of $28.51, and trading -7.7% below its 52 week high of $41.64. However, Rogers does have a higher than expected Liabilities to Equity ratio of 3.01, which is far above Bell’s (BCE-T) ratio of 1.41, and the Telus (T-T) ratio of 1.46. That is definitely something that needs some research before jumping in to buy. But with a dividend record date of November 18th and a new DRIP plan announced today, it may be a good time to buy in over the next week.
This is the part of the website where I tell you I am not a financial advisor (thank goodness) or an investment dealer (LOL). This website does not offer professional or financial advice, only my personal rants and opinions (hope you enjoy them). I’m also supposed to tell you to consult with a “professional” financial advisor before making any investment decisions. Be prudent and cautious. Do your own research, and only invest in what you understand!