Will Rogers Communications (RCI) Disappoint In Q1 Earnings?

 | Apr 12, 2017 11:45PM ET

Rogers Communications Inc. (NYSE:RCI) , the largest integrated telecom operator in Canada, is slated to report first-quarter 2017 results on Apr 18, after the market closes.

Last quarter, Rogers Communications’ bottom line matched the Zacks Consensus Estimate. Moreover, the company’s earnings lagged the Zacks Consensus Estimate in three of the previous four quarters, with an average negative surprise of 6.52%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Rogers Communications continues to face tough competition from market incumbents like TELUS Corp. (NYSE:TU) and BCE Inc. (TO:BCE) , and other small regional cable TV operators in the wireless market of Canada. Moreover, Shaw Communications Inc.’s (NYSE:SJR) entry into the market with the WIND Mobile acquisition has intensified competition.

Additionally, the company’s media segment remains exposed to persistent softness in the advertising market. Rogers Communications, similar to other cable companies, has lost viewers to video streaming service providers like Netflix (NASDAQ:NFLX) because of cheap source of TV programming. Such competitive threats from video streaming service providers led to the discontinuation of Shomi video streaming services, which was a major setback.

Further, the company exited 2016 with high debt levels and no cash and cash equivalents on its balance sheet. Accumulating debt and declining cash flow may pose problems for its credit ratings in the upcoming release. We look forward to seeing how far the company succeeds in improving its liquidity scenario in the first quarter, with all its strategic business moves.

In spite of such downturns, shares of Rogers Communications outperformed the Zacks categorized ‘ Earnings ESP Filter .

Zacks Rank: Rogers Communications currently carries a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Rogers Communication, Inc. Price and EPS Surprise

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