Home > Top 3 reasons to buy Shaw Communications ahead of quarterly earnings

Top 3 reasons to buy Shaw Communications ahead of quarterly earnings

Shaw Communications (NYSE:SJR) is one of the first companies to report its quarterly earnings in 2022. Investors expect EPS of $0.27 on the quarter and the annual revenue estimate for the fiscal period ending August 2022 is $4.36 billion.

Shaw Communications is a Canadian company from Calgary operating in the cable and satellite industry. It offers communication services such as Internet and WiFi connectivity, and it was founded in 1966.

The company operates with three main divisions: consumer, wireless, and business. The consumer division provides optic fiber connectivity in British Columbia, Alberta, Saskatchewan, Manitoba, and Northern Ontario. The wireless division serves over 19 million Canadians, and the business division addresses Canadian businesses of all sizes.

Ahead of the quarterly release, investors expect EPS of $0.27 and the annual revenue estimate for the fiscal period ending August 2022 to reach $4.36 billion. In addition, the company pays a hefty dividend, with a dividend yield of 3.16% and a dividend payout ratio of 77.22%.

Reported higher EPS than the estimate for the past six consecutive quarters

Shaw Communications has reported much higher EPS than the market expected for the past six consecutive quarters. As such, the bias is that heading into the January 12 earnings call, it will do so again.  

Strong free cash flow position

One of the most important metrics to evaluate a business's soundness is the free cash flow position. It shows what is left after the company covers the cost of doing business and the higher the number, the better. Free cash flow is used to withdraw debt, expand the product and services offered, or acquire other companies.

Shaw Communications' free cash flow has almost doubled in the past two fiscal years, showing a healthy business model.

Higher EBIT margin when compared to the sector median

Shaw Communications operates with a gross profit margin of 45.49% and an EBIT margin for the past twelve months of 23.25%. The EBIT margin is higher than the sector median by 115.35%.

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