Shares of Shaw Communications Inc. (SJR) touched a fresh 52-week high of $25.93 yesterday, before ending the session a trifle lower at $25.91. Year-to-date, the company’s shares reflect a solid return of nearly 9%.
Strong EBITDA margin, higher free cash flow outlook, the expansion of Shaw Go WiFi networks, lower churn rate and continuous Internet subscriber growth were the catalysts behind the stock’s rally. Moreover, improved revenue growth buoyed by price increases has further supported a hike in share price.
Shaw Communications is gradually expanding its WiFi network. The Shaw Go WiFi facility is available in over 35,000 locations in Canada. Shaw Communications has deployed high-speed DOCSIS 3.0 network in several western Canadian markets under the brand name of “Nitro Internet Service." This technology offers 100 Mbps of download speed.
The company launched Shaw Gateway service, which offers more than 1,200 HD Video-on-Demand titles while enabling clients to link pictures and content from PC’s to TV’s. The company also introduced Personal Video Recorder service which allows viewers to record popular shows with 500 GB capacity full HD video support.
Launch of such value-added services will not only bolster the company’s top line but will also drive subscriber growth. In the recently concluded third quarter of 2014, the company added 12,399 and 4,834 subscribers for its Internet and Digital phone lines, respectively. Moreover, the company expects revenues in fiscal 2014 to increase in the range of 2–4%.
In addition, Shaw Communications continues to boost shareholders wealth by increasing dividend payments and buying back shares on a regular basis. In keeping with this, the company raised its annual dividend rate by 8% to $1.10 per share and has also authorized a repurchase of 20 million shares within a year.
Despite the strong price appreciation, this Zacks Rank #2 (Buy) stock still has plenty of upside left, given the positive earnings estimate revisions witnessed over the recent past. In the last 30 days, the company has witnessed upward revisions with the Zacks Consensus Estimate for earnings moving up by 1.9% to $1.62 for the current year.
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