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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportSHAW COMMS-CL B (SJR): Free Stock Analysis ReportTELUS CORP (TU): Free Stock Analysis ReportCABLEVISION SYS (CVC): Free Stock Analysis ReportCOMCAST CLA SPL (CMCSK): Get Free ReportTo read this article on Zacks.com click here.Zacks Investment Research