We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Telus (TU) Up 7% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Telus (TU - Free Report) . Shares have added about 7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Telus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
TELUS’ Q2 Earnings Miss Estimates, Revenues Rise Y/Y
TELUS reported mixed second-quarter 2020 results, with the top line beating the Zacks Consensus Estimate and the bottom line missing the same.
Net Income
Net income in the June-end quarter fell 43.9% year over year to C$290 million or C$0.23 per share. This reflects impact from the COVID-19 pandemic, higher income tax, increased depreciation and amortization charges, and higher financing costs.
Adjusted net income was C$316 million or C$0.25 per share ($227.9 million or 18 cents per share) compared with C$416 million or C$0.35 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 3 cents.
Revenues
Quarterly total operating revenues increased 3.6% year over year to C$3,728 million ($2,689 million). This reflects the current economic environment wherein TELUS’ business customers are facing lower operations. The top line surpassed the consensus estimate of $2,646 million.
Segment Results
Revenues in TELUS Wireless declined 7.6% year over year to C$1,846 million due to lower network, and equipment and other service revenues. Network revenues fell 3.3% to C$1,472 million, reflecting a 5.8% decline in mobile phone ARPU. Equipment and other service revenues were C$360 million, down 20.9% year over year. This was caused by lower contracted volumes resulting from customers’ reduced shopping habits due to the COVID-19 pandemic.
The segment’s adjusted EBITDA of C$890 million decreased 3.7% over the same period a year ago, due to the impacts of the pandemic including lower roaming revenues resulting from restricted travel. Adjusted EBITDA margin was 48.2% compared with 46.3% in the year-ago quarter. Capital expenditures increased 4.9% year over year to C$234 million.
Revenues in TELUS Wireline increased 17.1% year over year to C$1,961 million, supported by data services revenue growth and other operating income growth of C$68 million. Data services revenues were C$1,493 million, up 18%. This was led by higher revenues from the company’s diverse portfolio of solutions including TELUS International customer care and business services. Voice service (local and long distance) revenues were C$236 million, down 5.2%. Other service and equipment revenues were C$95 million, remaining stable.
The segment’s adjusted EBITDA of C$471 million decreased 1.5% from the year-ago quarter figure. Adjusted EBITDA margin was 24.9% compared with 28.5% in the prior-year quarter, impacted by declines in legacy voice and data services, and higher employee benefit expenses mainly from business acquisitions. Capital expenditures were down 4.6% year over year to C$522 million.
Other Details
Overall, EBITDA was C$1,359 million, down 1% year over year. This reflects the financial impacts arising from the pandemic, primarily from lower wireless roaming revenues partly offset by growth in wireline data service margins. Adjusted EBITDA decreased 2.9% year over year to C$1,361 million.
Cash Flow & Liquidity
In the first six months of 2020, TELUS generated C$2,639 million of cash from operating activities compared with C$1,950 million in the year-ago period. Free cash flow for the same period increased 121.4% year over year to C$1,056 million.
As of Jun 30, the company had C$971 million ($711.7 million) of net cash and temporary investments with C$17,956 million ($13,160.9 million) of long-term debt.
Guidance
Due to uncertainties stemming from the COVID-19 pandemic, TELUS withdrew its consolidated financial guidance for 2020. However, the company intends to provide an outlook while issuing its third-quarter results.
Conversion rate used:
C$1 = $0.721295 (period average from Apr 1, 2020 to Jun 30, 2020)
C$1 = $0.732952 (as of Jun 30, 2020)
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Telus has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Telus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Telus (TU) Up 7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Telus (TU - Free Report) . Shares have added about 7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Telus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
TELUS’ Q2 Earnings Miss Estimates, Revenues Rise Y/Y
TELUS reported mixed second-quarter 2020 results, with the top line beating the Zacks Consensus Estimate and the bottom line missing the same.
Net Income
Net income in the June-end quarter fell 43.9% year over year to C$290 million or C$0.23 per share. This reflects impact from the COVID-19 pandemic, higher income tax, increased depreciation and amortization charges, and higher financing costs.
Adjusted net income was C$316 million or C$0.25 per share ($227.9 million or 18 cents per share) compared with C$416 million or C$0.35 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 3 cents.
Revenues
Quarterly total operating revenues increased 3.6% year over year to C$3,728 million ($2,689 million). This reflects the current economic environment wherein TELUS’ business customers are facing lower operations. The top line surpassed the consensus estimate of $2,646 million.
Segment Results
Revenues in TELUS Wireless declined 7.6% year over year to C$1,846 million due to lower network, and equipment and other service revenues. Network revenues fell 3.3% to C$1,472 million, reflecting a 5.8% decline in mobile phone ARPU. Equipment and other service revenues were C$360 million, down 20.9% year over year. This was caused by lower contracted volumes resulting from customers’ reduced shopping habits due to the COVID-19 pandemic.
The segment’s adjusted EBITDA of C$890 million decreased 3.7% over the same period a year ago, due to the impacts of the pandemic including lower roaming revenues resulting from restricted travel. Adjusted EBITDA margin was 48.2% compared with 46.3% in the year-ago quarter. Capital expenditures increased 4.9% year over year to C$234 million.
Revenues in TELUS Wireline increased 17.1% year over year to C$1,961 million, supported by data services revenue growth and other operating income growth of C$68 million. Data services revenues were C$1,493 million, up 18%. This was led by higher revenues from the company’s diverse portfolio of solutions including TELUS International customer care and business services. Voice service (local and long distance) revenues were C$236 million, down 5.2%. Other service and equipment revenues were C$95 million, remaining stable.
The segment’s adjusted EBITDA of C$471 million decreased 1.5% from the year-ago quarter figure. Adjusted EBITDA margin was 24.9% compared with 28.5% in the prior-year quarter, impacted by declines in legacy voice and data services, and higher employee benefit expenses mainly from business acquisitions. Capital expenditures were down 4.6% year over year to C$522 million.
Other Details
Overall, EBITDA was C$1,359 million, down 1% year over year. This reflects the financial impacts arising from the pandemic, primarily from lower wireless roaming revenues partly offset by growth in wireline data service margins. Adjusted EBITDA decreased 2.9% year over year to C$1,361 million.
Cash Flow & Liquidity
In the first six months of 2020, TELUS generated C$2,639 million of cash from operating activities compared with C$1,950 million in the year-ago period. Free cash flow for the same period increased 121.4% year over year to C$1,056 million.
As of Jun 30, the company had C$971 million ($711.7 million) of net cash and temporary investments with C$17,956 million ($13,160.9 million) of long-term debt.
Guidance
Due to uncertainties stemming from the COVID-19 pandemic, TELUS withdrew its consolidated financial guidance for 2020. However, the company intends to provide an outlook while issuing its third-quarter results.
Conversion rate used:
C$1 = $0.721295 (period average from Apr 1, 2020 to Jun 30, 2020)
C$1 = $0.732952 (as of Jun 30, 2020)
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Telus has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Telus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.