Cogeco Communictions Inc. News:
Cogeco Communications Inc. released its financial results for the third quarter ended May 31, 2023. While the Canadian telecommunications business performed well, the U.S. telecommunications segment faced challenges. The company remains committed to expanding its fibre network projects and delivering high-quality products and customer service. The Canadian telecommunications business showed growth in internet customers, driven by traditional and newly served areas, as well as the recently acquired oxio brand. However, the U.S. telecommunications business, Breezeline, faced difficulties due to macroeconomic and competitive factors. Despite this, the company’s focus on higher-value products and cost efficiency initiatives resulted in a higher adjusted EBITDA margin compared to the previous year and quarter.
Key operating results for the third quarter of fiscal 2023 include:
- Revenue: Revenue increased by 1.9% to $741.8 million. However, on a constant currency basis, revenue decreased by 1.3% due to a decline in the American telecommunications segment, partially offset by growth in the Canadian telecommunications segment.
- Adjusted EBITDA: Adjusted EBITDA increased by 1.1% to $351.3 million. On a constant currency basis, adjusted EBITDA decreased by 1.8% primarily due to the decline in the American telecommunications segment.
- Profit: Profit for the period amounted to $101.5 million, a decrease compared to the same period last year. The decrease in profit was mainly due to higher financial expenses and acquisition, integration, restructuring, and other costs, but partially offset by lower depreciation and amortization expenses, income taxes, and the appreciation of the US dollar.
- Net Capital Expenditures: Net capital expenditures decreased by 6.8% to $169.8 million compared to the same period last year. In constant currency, net capital expenditures decreased by 10.5% mainly due to reduced spending in the Canadian telecommunications segment.
- Acquisition of Property, Plant, and Equipment: The acquisition of property, plant, and equipment decreased by 3.9% to $189.7 million, primarily due to reduced capital spending in the Canadian telecommunications segment.
- Free Cash Flow: Free cash flow remained comparable at $104.4 million despite higher financial expenses, acquisition, integration, restructuring, and other costs. This was offset by lower net capital expenditures and current income taxes.
- Cash Flows from Operating Activities: Cash flows from operating activities decreased by 19.4% to $284.4 million. This decline was driven by a decrease in net inflow from non-cash operating activities, primarily due to the timing of trade and other payables, as well as an increase in income taxes and interest paid.
During the quarter, Cogeco Communications acquired spectrum licenses in the 2500 MHz and 3500 MHz bands in Québec, aligning with its plan to offer mobility services within its operating footprint. The company restated its fiscal 2023 financial guidelines and announced that it will provide its fiscal 2024 financial guidelines when reporting its fourth-quarter financial results. The Board of Directors declared a quarterly eligible dividend of $0.776 per share, representing a 10.1% increase compared to the same quarter in fiscal 2022.
Analysts Coverage Change:
- STA Research (RANK #43) maintains a “Buy” rating for Cogeco Communications and lowers the target price to $74 from $79.
- Canaccord Genuity (RANK #20) maintains a “Buy” rating for Cogeco (CCA:TSX) and raises the target price to $70 from $67.5.
- BMO Capital Markets (RANK #8) maintains a “Market Perform” rating for Cogeco Communications with a target price of $75.
- TD Securities maintains (RANK #12) a “Buy” rating for Cogeco Communications with a target price of $105.
Cogeco Communications Inc Stock Forecast:
According to a stock forecast from eight analysts, the average target price for Cogeco Communications Inc over the next 12 months is CAD 86.04. The average analyst rating for the company is “Buy.” Stock Target Advisor’s own analysis of Cogeco Communications Inc indicates a slightly bullish outlook, with 11 positive signals and 6 negative signals. As of the last closing, the stock price of Cogeco Communications Inc was CAD 68.43. Over the past week, the stock price has decreased by -3.40%, while over the past month it has increased by +1.45%. However, looking at the last year, the stock price has declined by -16.72%.
