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Is Shaw Communications Inc. a Buy Following Strong Q2 Earnings?

Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) is coming off a week where its stock gained 7.9% on the back of an impressive earnings beat and the announcement of its monthly $0.985 dividend.

Today, Shaw stock yields investors 4.42%, which is considerably above the average dividend yield of the broader market, but is the stock still a buy at these levels?

A market-beating quarter

Shaw easily surpassed analyst expectations in the second quarter, reporting 12.4% growth in revenues and adjusted earnings per share (EPS) of $0.50 versus expectations of $0.28.

The company’s outperformance was driven largely by gains in its wireless business, recording 93,000 post-paid subscribers in the quarter — a new record for the company.

In 2017, Shaw acquired 700 MHz and 2,500 MHz wireless spectrum licences from Quebecor, Inc., and in 2018 the company is adding to its push towards building a more competitive wireless for Canadians by adding approximately 100 mobile sales outlets in Loblaw Companies Ltd. locations across the country.

Moving away from television and towards wireless and data

Recent outperformance in the company’s wireless business won’t come as too much of a shock to those who have been following the company.

Last year, Shaw exited its IT business, ViaWest, for proceeds of US$1.675 billion, and prior to that it sold its media assets to Corus Entertainment Inc. in 2016 for $2.65 billion.

The result is a leaner, meaner operation with a more concentrated focus on wireless and data — a market the company sees as offering the best potential for its shareholders.

Is too late to make your move?

Shaw’s stock has a 52-week low of $23.90 and a 52-week high of $30.44.

During the company’s 2017 fiscal year, Shaw stock traded between $25.70 and $30.44, and during fiscal 2016 Shaw stock traded between $20.47 and $25.22.

This tells us a couple of things.

One is that Shaw’s stock price typically doesn’t tend to experience a lot of volatility or price swings.

It also tells us that the time to initiate a position in the company was probably before it reported second-quarter earnings last week, when shares traded just above $24, rather than after the fact and now that shares are approaching $27.

For current investors, the shares are probably a hold, as Shaw’s second quarter demonstrated strong performance in its wireless business thanks to some aggressive deal making in recent years and the recent introduction of Apple Inc. iPhone into its product line-up.

But the sad truth of the matter is that those who aren’t already in the company may be better off finding a more timely opportunity elsewhere.

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Fool contributor Jason Phillips has no position in any of the stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple.

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