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Shaw Communications: Multiple Years Of Growth Expected

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Ploutos Investing


  • Shaw Communications is a leading cable operator in Western Canada and currently the fourth largest wireless communication service provider in the country.
  • Shaw should be able to grow its wireless segment with strong subscribers and ARPU growth in the next few years.
  • The company is suitable for investors with a long-term investment horizon.

Investment Thesis

Shaw Communications (SJR) (TSX:SJR.B) had a good Q1 F2019 in both its wireline and wireless segments. The company should continue to benefit from strong growth in its wireless segment as it continues to deploy its 700MHz spectrum and expand its coverage areas to other parts of Canada. We also expect it to buy more spectrums in the upcoming spectrum auction, thanks to favorable government policy towards new entrants. In its wireline Internet business, the implementation of DOCSIS3.1 should help Shaw to compete against TELUS (TU). In fact, after several quarters of negative subscribers growth, the company saw its wireline Internet subscribers growth rate turn positive in the past quarter. We expect Shaw to grow its EBITDA at low double digits in the next few years. Hence, it is a good holding for investors with a long-term investment horizon.

SJR.B data by YCharts

Recent Developments

Shaw delivered excellent Q1 F2019 earnings with strong top and bottom lines growth. As can be seen from the table below, its revenue increased by 8.8% year over year to C$1.355 billion. Its operating margin expanded by 1.6 percentage points to 40.2%. Its net income also increased significantly to C$187 million.

Andy_SSD:private:var:folders:y4:_clxjt7n0s525kf60mgm4jhc0000gn:T:TemporaryItems:Screen Shot 2019-01-21 at 5.25.35 PM.png

Source: Q1 2019 Financial Report

Strong growth in wireless segment

The increase in its revenue was primarily driven by strong growth in its wireless segment. As can be seen from the chart below, its wireless segment revenue increased by nearly 60% to C$273 million in Q1 F2019 from C$171 million in Q1 F2018.

Andy_SSD:private:var:folders:y4:_clxjt7n0s525kf60mgm4jhc0000gn:T:TemporaryItems:Screen Shot 2019-01-21 at 5.34.39 PM.png

Source: Q1 2019 Financial Report

In Q1 F2018, Shaw added about 86 thousand postpaid wireless customers. This was much better than the postpaid subscriber adds of 33 thousand in Q1 F2018.

Source: Created by author; Company Reports

Including its prepaid customers, the company now has over 1.46 million wireless subscribers. This is

This article was written by

Ploutos Investing profile picture
I am a value focused investor. Stocks rise and fall for many different reasons that we often cannot predict. Eventually, it is those companies with a wide moat and the ability to generate cash flow that prevail. Therefore, my investment focus is to find value stocks that are able to generate cash flow, with sustainable dividends and provide growth over time. I focus my attention on analyzing large-capped dividend growth stocks, REITs and ETFs. I aim at providing a quarterly update and insights on stocks I follow. Please feel free to browse the articles that I wrote and provide any comments.

Analyst’s Disclosure: I am/we are long SJR, RCI, TU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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