Shaw Communications, Inc. :SJR-US: Earnings Analysis: Q1, 2017 By the Numbers : January 18, 2017

Shaw Communications, Inc. reports financial results for the quarter ended November 30, 2016.

We analyze the earnings along side the following peers of Shaw Communications, Inc. – Cogeco Inc. (CGO-CA) that have also reported for this period.


  • Summary numbers: Revenues of USD 990.04 million, Net Earnings of USD 67.11 million.
  • Gross margins narrowed from 27.91% to 21.63% compared to the same period last year, operating (EBITDA) margins now 41.05% from 44.12%.
  • Year-on-year change in operating cash flow of -14.43% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-11-30 2016-08-31 2016-05-31 2016-02-29 2015-11-30
Relevant Numbers (Quarterly)
Revenues (mil) 990.04 1006.55 986.55 827.65 1074.75
Revenue Growth (%YOY) -7.88 -4.19 -13.9 -25.52 -13.52
Earnings (mil) 67.11 110.98 44.6 83.41 158.3
Earnings Growth (%YOY) -57.61 -47.84 -72.66 -38.43 -19.22
Net Margin (%) 6.78 11.03 4.52 10.08 14.73
EPS 0.13 0.22 0.13 0.23 0.33
Return on Equity (%) 5.79 9.08 3.72 7.5 14.53
Return on Assets (%) 2.33 3.84 1.58 3.03 5.79

Access our Ratings and Scores for Shaw Communications, Inc.

Market Share Versus Profits

Revenues History
Earnings History

SJR-US‘s change in revenue this period compared to the same period last year of -7.88% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SJR-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.64% and earnings by -39.53% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 27.91% to 21.63%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 44.12% to 41.05% in this time frame. For comparison, gross margins were 22.66% and EBITDA margins were 42.04% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

SJR-US‘s change in operating cash flow of -14.43% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 27.91% to 21.63% and (2) one-time items that contributed to a decrease in pretax margins from 22.41% to 6.85%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Shaw Communications, Inc.

Company Profile

Shaw Communications, Inc. operates as a communications and media company, which engages in the provision of consumers with broadband cable television, internet, home phone, telecommunications services, satellite direct-to-home services, and engaging programming content. It operates through the following segments: Consumer, Business Network Services, Business Infrastructure Services and Media. The Consumer segment includes telephone companies, local exchange carriers, non-facilities-based Voice over Internet Protocol and wireless providers. The Business Network Services segment offers data and video transport and internet connectivity services to businesses. The Business Infrastructure Services segment comprises information technology services business which operates in market that includes telecommunications companies, carriers, managed services providers, large real estate investment trusts, and data centre operators. The Media segment involves in the television business and advertising markets. The company was founded by James Robert Shaw on December 9, 1966 and is headquartered in Calgary, Canada.

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