Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI), one of the largest communications and media companies in Canada, released first-quarter earnings after the market closed on April 20 and its stock responded by rising about 0.5% in the trading session that followed. Let’s take a closer look at the results to determine if we should be long-term buyers today, or if we should wait for a better entry point in the trading sessions ahead instead.
The mixed first-quarter results
Here’s a summary of Rogers’ first-quarter earnings compared to what analysts had anticipated and its results in the same period a year ago.
|Earnings Per Share||$0.53||$0.63||$0.66|
|Operating Revenue||$3.18 billion||$3.16 billion||$3.02 billion|
Source: Financial Times
Rogers’ adjusted diluted earnings per share decreased 19.7% and its revenue increased 5.1% compared with the first quarter of fiscal 2014. Rogers’ double-digit decline in earnings per share can be attributed to its adjusted net income decreasing 19.1% to $275 million, and the company noted that this was a direct result of a 7.7% increase in depreciation and amortization, as well as a 3.2% decrease in adjusted operating profit.
Its strong revenue growth can be attributed to revenues increasing in three of its four major segments, led by 26.4% growth to $464 million in its media segment, 3.9% growth to $1.79 billion in its wireless segment, and 1.2% growth to $870 million in its cable segment, while revenues remained unchanged at $94 million in its business solutions segment.
Here’s a quick breakdown of 10 other important statistics and updates from the report compared to the year-ago period:
- Total Internet subscribers increased 1.2% to 2 million
- Total television subscribers decreased 5.9% to 1.98 million
- Total phone subscribers decreased 2.8% to 1.13 million
- Total cable homes passed increased 2.4% to 4.09 million
- Total service units decreased 2.6% to 5.12 million
- Adjusted operating profit decreased 3.2% to $1.12 billion
- Adjusted operating profit margin contracted 300 basis points to 35.4%
- Free cash flow decreased 25.3% to $266 million
- Cash provided by operating activities decreased 44.4% to $227 million
- Adjusted net debt increased 19.6% to $15.22 billion
Should you buy shares of Rogers Communications Inc. today?
Even though Rogers’ first-quarter earnings were far from impressive, I do think its stock represents an attractive long-term investment opportunity today because it trades at inexpensive valuations and has a very high dividend yield.
First, Rogers’ stock trades at just 14.1 times fiscal 2015’s estimated earnings per share of $2.99 and only 13.6 times fiscal 2016’s estimated earnings per share of $3.10, both of which are inexpensive compared to the industry average multiple of 24.1 and its long-term growth potential.
Second, Rogers pays a quarterly dividend of $0.48 per share, or $1.92 per share annually, giving its stock a very high 4.6% yield at current levels. The company has also increased its dividend 11 times since 2005, making it one of the top dividend-growth plays in the market today.
With all of the information provided above in mind, I think Rogers represents one of the best long-term investment opportunities in the market today. Foolish investors should take a closer look and strongly consider beginning to scale in to long-term positions.
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Fool contributor Joseph Solitro has no position in any stocks mentioned. Rogers Communications is a recommendation of Stock Advisor Canada.