Shares of BCE (TSX: BCE) popped by as much as 5.6% this morning to $33.50 apiece. While the stock gave up some of these gains later in the session, it was still trading with a strong 4% gain at around 10:30 am ET. And even if the stock manages to conclude this trading session here, it would mark its best single-day percentage gain in nearly six months.
Let’s find out what’s behind this move in BCE stock.
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A sharp earnings rebound and free cash flow boost
Today’s rally in BCE stock comes after the Canadian communications giant reported a strong rebound in third-quarter (Q3) results, driven partly by a one-time gain from selling its stake in Maple Leaf Sports and Entertainment. For the quarter, the company’s net earnings soared to $4.6 billion compared to a loss in the same quarter last year.
More importantly, BCE’s free cash flow jumped 21% to $1 billion, giving investors more confidence in its dividend-paying ability.
Investors also cheered fiber growth and buyback news
Investors also reacted positively to BCE’s continued expansion in high-speed Internet, wireless networks, and artificial intelligence (AI)-powered services. Notably, the company added over 26,000 retail Internet customers in the latest quarter, and its Ziply Fiber acquisition in the U.S. is already contributing to its revenue and profit growth.
Adding to the bullish sentiment, BCE also renewed its share buyback program to repurchase preferred shares. For long-term investors, this quarter signals that BCE’s fundamentals could be stabilizing after a tough year, while it continues to offer a healthy dividend.
