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Will Shaw Communications (SJR) Miss Earnings?

Zacks Equity Research

Canadian cable multiple-system operator Shaw Communications Inc. (SJR) is scheduled to report its third-quarter fiscal 2014 results before the opening bell on June 26, 2014.

In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 13.5%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Shaw Communications is gradually expanding its Wi-Fi network across Western Canada and has also formed a pact with Winnipeg and Victoria municipalities to extend coverage in those areas. Currently, the Shaw Go WiFi facility is available in over 35,000 locations in Canada.

Gain of high-speed Internet and telephony subscribers, the expansion of Shaw Go Wi-Fi networks, additional applications supporting the Shaw Global Go TV Everywhere service and the launch of Anik G1 satellite, which enables the company to add over 140 channels for the Shaw Direct service, are likely to act as upsides for the company in the coming quarters.

However, stiff competition is resulting in persistent loss of video and DTH subscribers. Moreover, considerable debt, rising capital expenditure and deteriorating cash position may act as headwinds for the company moving ahead.

Earnings Whispers?

Our proven model does not conclusively show that Shaw Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 45 cents. Hence, the ESP is 0.00%.

Zacks Rank: Shaw Communications’ Zacks Rank #4 (Sell) when combined with a zero ESP makes surprise prediction difficult.

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

Other Stocks to Consider

Here are some companies you may consider as our model shows these have the right combination of elements to post an earnings beat in their upcoming quarterly results.

Regal Entertainment Group (RGC), with earnings ESP of +15.15% and a Zacks Rank #1 (Strong Buy).

DreamWorks Animation SKG Inc. (DWA), with earnings ESP of +11.11% and a Zacks Rank #3 (Hold).

Twenty-First Century Fox, Inc. (FOXA), with earnings ESP of +2.56% and a Zacks Rank #3 (Hold).

Read the Full Research Report on SJR
Read the Full Research Report on RGC
Read the Full Research Report on FOXA
Read the Full Research Report on DWA

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