Shaw Communications Down to Sell on Video Customer Loss - Analyst Blog

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Zacks Investment Research downgraded Canada-based Shaw Communications ( SJR ) by a notch to a Zacks Rank #4 (Sell) on Sep 2, 2014.

Why the Downgrade?

In the recently concluded third quarter of fiscal 2014, Shaw Communications lost around 20,758 cable TV and 1,405 DTH (direct-to-home) subscribers. TELUS Corporation's ( TU ) popular Optik TV with IPTV services which support over 400 digital channels is posing significant competitive threat to Shaw Communications. Interestingly, IPTV offers over 100 HD channels along with on-demand 3D movies.

Meanwhile, Shaw Communications reported dismal third-quarter 2014 results wherein both its top and bottom line missed the Zacks Consensus Estimate. The company also exited the reported quarter with nearly $4.3 billion debt as compared with $3.5 billion debt in the prior-year quarter. Hence, we apprehend that the company's cash position will deteriorate further with future dividend payments and share buybacks. Moreover, the maturity of nearly $1.3 billion debt over the next four years will further pressurize the company's cash flow. 

For the current year, there has been a negative movement in earnings estimates over the last 60 days. Consequently, the Zacks Consensus Estimate fell 0.6% to $1.61. 

Other Stocks to Consider

Investors interested in the related industry may consider better-ranked stocks like Cablevision Systems Corporation ( CVC ) and Comcast Corporation ( CMCSK ). Cablevision sports a Zacks Rank #1 (Strong Buy) while Comcast has a Zacks Rank #2 (Buy).


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SHAW COMMS-CL B (SJR): Free Stock Analysis Report

TELUS CORP (TU): Free Stock Analysis Report

CABLEVISION SYS (CVC): Free Stock Analysis Report

COMCAST CLA SPL (CMCSK): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: SJR , TU , CVC , CMCSK

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