Rogers Communications & CP Railway

Comments on Q1 2018 Earnings

Rogers Communications Q1 2018 EPS $0.90 vs. estimates of $0.74
TSE: RCI.b

-“We delivered another strong quarter with really solid financial and operating results led by our largest segment, Wireless,” said Joe Natale, President and CEO.

-Rogers added 95 000 net postpaid wireless subscribers.

-Revenue rose 7.7% to $3.63 billion and free cash flow increased 18%.

-As the telecom sector is viewed as interest-rate sensitive, Rogers’ has seen large selling pressure, which seems extreme to me. With a current dividend yield of 3.31%, an entry into this stock around these levels looks attractive. Hopefully this earnings beat proves to be a catalyst for the stock’s future returns.

-Rogers’ also benefits from the success of the Toronto Maple Leafs, Toronto Blue Jays and Toronto Raptors, all of which are currently experiencing massive success. Well maybe not the Leafs after yesterday’s 3-1 loss to the Bruins.

-I personally only hold shares in BCE, which also does have exposure to the major sports teams, but either company would make a great addition to one’s portfolio.

Canadian-Pacific Railway Q1 2018 EPS $2.70 vs. estimates of $2.68
TSE: CP

-“This was a challenging quarter, as we battled extreme weather and unprecedented demand, specifically in the northern reaches of our network,” said Keith Creel, CP’s President and CEO.

-CP’s operating ratio increased to 67.5% from 62.4%, a sign of decreasing efficiency.

-Revenue rose 4% to $1.66 billion while expenses rose 12.3% to $1.12 billion.

-Dividend growth 5-year average: 10.5%

-From the CBC, a possible strike of 3 400 workers looms over the weekend, adding to CP’s first quarter woes. This upcoming strike is something worth monitoring for investors, and management would hope to resolve this issue quickly.

-From Bloomberg, Fidelity is adding to CP they view crude by rail increasing as pipelines remain out of favour.

-Update on 4/20/2018: CP is closing some operations before the potential strike (CBC)

-In my portfolio, I hold CN Rail only as it is viewed with a premium over CP, which has narrowed recently. The railways are staples in any portfolio, with a moat unlike any other. CP Rail is flat since my last earnings report.

Disclosure

Please consult a financial advisor before making investment decisions.

This report represents my views, not actionable advice