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Will Shaw Communications' (SJR) Q1 Earnings Disappoint?

Canadian cable TV behemoth Shaw Communications, Inc.SJR is slated to release its first-quarter fiscal 2016 financial numbers on Jan 14, before the opening bell.

Last quarter, Shaw Communications posted a 20% negative earnings surprise. In fact, the company's earnings have missed the Zacks Consensus Estimate in three of the last four quarters, which leads to an average miss of 2.40%. Let's see how things are shaping up ahead of this announcement.

Factors Likely to Influence this Quarter

Persistent loss of video cable and video satellite customers at Shaw Communications owing to stiff competition from Canadian telecom and cable multi-service operators may affect the quarter's performance. Moreover, increasing expenses stemming from higher promotional activities and rising network fees will possibly hurt margins.

In addition, considerable debt, escalating capital expenditure and a deteriorating cash position may further dent the company's profitability in the to-be-reported quarter.

Meanwhile, Shaw Communications' subsidiary ViaWest Inc.'s decision to purchase INetU Inc. for $162.5 million and introduction of SmartWiFi and SmartSecurity Service by Shaw Communications to reach the benefits of managed WiFi and network security to small and medium businesses (SMB) should duly boost the quarter's results.

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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below:

Zacks ESP : Shaw Communications has an earnings ESP of -5.71%. This is because the Most Accurate estimate stands at 33 cents while the Zacks Consensus Estimate is pegged higher at 35 cents.

Zacks Rank : Shaw Communications has a Zacks Rank #5 (Strong Sell). Note that, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:

InterDigital, Inc. IDCC has an earnings ESP of +33.33% and a Zacks Rank #1.

Ruckus Wireless, Inc. RKUS has an earnings ESP of +42.86% and a Zacks Rank #2.

Time Warner Cable Inc. TWC has an earnings ESP of +5.65% and a Zacks Rank #3.

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INTERDIGITL INC (IDCC): Free Stock Analysis Report

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

TIME WARNER CAB (TWC): Free Stock Analysis Report

RUCKUS WIRELESS (RKUS): Free Stock Analysis 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 Nasdaq, Inc.


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

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