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Shaw Communications Inc Class B SJR

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Shaw's Q1 Provides Plenty to Be Encouraged About While Leaving Fodder for Bears as Well

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

A top-line miss but EBITDA beat relative to FactSet consensus estimates is just one illustration of the contradictory nature of Shaw Communications' fiscal first-quarter report. The firm had a stellar quarter with regard to wireless subscriber additions and saw pricing and profitability jump in its wireline segment. However, it continues to shed wireline customers, and the wireless additions were accompanied by lower wireless average billing per subscriber unit and disappointing wireless EBITDA. Overall, we see Shaw making positive strides and believe the stock is undervalued relative to our unchanged CAD 27 fair value estimate.

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Company Profile

Business Description

Shaw Communications is a Canadian cable company that is one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. In fiscal 2020, more than 75% of Shaw's total revenue resulted from this wireline business. Shaw is also now a national wireless service provider after acquiring Wind Mobile in 2016. Shaw has upgraded its wireless network, undertaken an aggressive pricing strategy, and significantly enhanced its spectrum holdings. As a smaller carrier, Shaw has favored bidding status in spectrum auctions, giving it a further boost in enhancing its wireless network. At the 2019 auction, Shaw added significant amounts of 600 MHz spectrum to the 700 MHz spectrum it is currently deploying.

630 - 3rd Avenue S.W., Suite 900
Calgary, AB, T2P 4L4, Canada
T +1 403 750-4534
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Nov 30, 2020
Fiscal Year End Aug 31, 2021
Stock Type
Employees 9,500