ls BCE Inc a good buy ?
The key thing about BCE is its sweet dividend deal! 💸 It dishes out 1per share every quarter,adding up to 4 a year. With BCE shares at $48, that's an 8.3% yield, yum! 🍰 Plus, as a Canadian telecom giant, BCE faces little competition. CRTC keeps foreign players out, giving BCE and others pricing clout. 💪 Sure, it means we pay top dollar for TV and phone, but BCE's pockets are happy! 💰
The problem with BCE is basically everything else. The company’s most recent earnings were not very good. Some select metrics from the release are shown below:
Revenues: $6.1 billion, down 1%.
$604 million in net income, up 52%.
Adjusted net income: $712 million, down 1.4%.
Cash from operations: $2.1 billion, down 9.6%.
Free cash flow: $1.1 billion, up 8%.
$604 million in net income, up 52%.
Adjusted net income: $712 million, down 1.4%.
Cash from operations: $2.1 billion, down 9.6%.
Free cash flow: $1.1 billion, up 8%.
It was a mixed bag. The rising free cash flow and net income were very welcome, but most earnings metrics other than net income (operating income, earnings before tax, etc) grew only very slightly. It looks like unrealized gains or perhaps a deferred tax may have been responsible for the big Q2 jump in net income. If so, we would not expect the gain to recur into the future.
The long-term story is fairly similar: over the last five years, BCE’s revenue, earnings, and free cash flow have compounded at the following rates:
Revenue: 0.8%.
Earnings: -7.9%.
Levered free cash flow: -4.8%. $BCE Inc (BCE.CA)$
The long-term story is fairly similar: over the last five years, BCE’s revenue, earnings, and free cash flow have compounded at the following rates:
Revenue: 0.8%.
Earnings: -7.9%.
Levered free cash flow: -4.8%. $BCE Inc (BCE.CA)$
These are all per year figures: the cumulative five-year results are worse. Last but not least, BCE’s free cash flow payout ratio is 131%, meaning the company pays out more in dividends than it earns in cash.
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