BCE Inc. Posts 2nd-Quarter Results: Steady Growth Continues

BCE Inc. (TSX:BCE)(NYSE:BCE) has long been considered one of the best investments on the market in terms of a dividend payout as well as in terms of the massive moat that exists around the vast number of holdings the company has, which range from the core wireless, internet, and TV subscriptions to radio stations and even sports teams.

Investors might be reconsidering the company after the latest results were released. Here’s a look at what the company posted and whether or not investors should be concerned.

BCE’s quarterly results

The Montreal-based media behemoth posted net earnings that showed a 2% improvement for the quarter, coming in at $830 million. Analysts were forecasting the company would post earnings of $0.91 per share on an adjusted basis, which the company bettered by posting $0.94 per share.

In terms of total revenue growth, the company came in nearly even, posting sales of $5.3 billion as most analysts had expected.

The wireless business showed an impressive growth of 4.6% for the quarter, coming in at $1.6 billion. The wireless segment also saw the addition of 70,000 contract customers for the quarter–a significant increase over the 47,000 that analysts had been calling for.  The average revenue per user across the wireless segment increased by nearly 3% to $64.32 per month.

The company’s massive media sector also reported favourable results for the quarter, coming in at $779 million for an increase of 5.3% for the quarter. Some of this increase can be attributed to the Toronto Raptors’s (another BCE holding) extended playoff run as well as higher subscriber fees.

Core subscribers are down, but don’t worry

In terms of the core subscription business, BCE added only a paltry 2,100 subscribers to the TV business and 7,500 new internet subscribers in the quarter. Analysts were forecasting the company would add 8,000 TV and 14,000 internet subscribers. Even the new IPTV customer segment came in lower than expected: BCE added 35,000 subscribers in the quarter, whereas approximately 50,000 had been expected.

Part of the reason for the drop in subscribers can be attributed to the introduction of fairly aggressive pricing from the company’s primary competitor in the hyper-competitive Toronto-area market.

Investors shouldn’t be concerned about this dip for one fairly important reason: margins. By opting to keep pricing levels the same, BCE is not only protecting margins, but it’s also protecting long-term value for shareholders.

BCE’s bottom line

On the whole, investors need not be worried about these results, which were lighter than previous quarters. Instead, investors should take solace in knowing that the company posted an impressive 41st consecutive quarter of year-over-year growth in EBITDA.

BCE’s wireless business continues to be one of the primary growth drivers for the company, and this is a trend that is surely to continue as customers’ insatiable appetite for data will drive average revenue per user price points higher.

In my opinion, BCE remains one of the best investments on the market. The dividend, growth prospects, and continued positive results ensure that this is truly a stock for investors to buy and forget.

Why we're buying more of this "Wall-Street Darling" that was left for dead!

The savvy team of analysts and advisors inside Stock Advisor Canada recently issued a "buy" alert on this downgraded stock. After being left for dead by five or more big banks in a five-week span, our team scooped up shares as fast as we could--and are recommending that Stock Advisor Canada members jump on this rare opportunity immediately. So simply click here to unlock the full details behind this new recommendation and join thousands of others inside of Stock Advisor Canada.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.