Byron Capital analyst Rob Goff says Rogers Communications is a Buy

Rogers CEO Nadir Mohamed. Byron Capital analyst Rob Goff says he was impressed with the performace of Roger’s wireless division, which he says numbers were better in part because of the company’s decision to focus on reducing its churn, or the number of subscribers it loses each month. Rogers Communications (TSX:RCI.B) today announced its Q2, 2012 results. The company’s numbers were a slight improvement over the same period last year. Revenue of $3.1-billion bested last year’s $3.09 billion topline and earnings of $.79 cents a share was marginally better than last year’s $76 cents.

Rogers President and CEO Nadir Mohamed was satisfied with the quarter: “Our revenue and adjusted operating profit growth in the second quarter was highlighted by strong postpaid wireless smart phone sales and customer retention metrics, as well as exceptionally strong margins in both our wireless and cable businesses,” he said, adding: “Despite highly competitive markets, we continued to leverage our technology leadership to deliver new and innovative products and services while at the same time taking decisive actions to drive operational efficiencies. Importantly, our continued generation of strong free cash flow enabled us to return a significant and growing amount of cash to our shareholders in the form of dividends and share buybacks.”

Byron Capital analyst Rob Goff says the results were solid, and he was especially impressed with the performance of Roger’s wireless division, which he says did better in part because of the company’s decision to focus on reducing its churn, or the number of subscribers it loses each month. Rogers churn rate of 1.15% was better than the consensus of 1.26%, which was the first year over year improvement in the number since the fourth quarter of 2009. In a research update to clients today, Goff maintained his BUY rating and $41 target on Rogers. (Editors note: Rob Goff subsequently upped his target on Rogers today, Wednesday July 25th, to $44.)

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This story is brought to you by Serenic (TSXV:SER). Serenic’s cash position as of February 29th, 2012, $3.93-million, was greater than its market cap as of July 23rd, which was $3.64-million. The company has zero long-term debt.

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Goff says that, despite widespread expectations Rogers would reduce it previous 2012 EBITDA guidance range of between $4.73 and $4.915-billion, management left the number intact. The Byron analyst noted that the $24 million outperformance on EBITDA vs. consensus came despite revenues that were $34 million below consensus, as cost containment efforts exceeded forecasts.

Shares of Rogers on the TSX closed today up 4.8% to $39.01.

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