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Bell Media, a part of Canadian telecom major BCE (TSX:BCE, NYSE:BCE), has been under fire for the recent layoffs. Hundreds of employees, including media crew, popular personalities, were laid off with bare minimum notice. As per reports, around 200 positions were cut in Toronto alone.
While BCE posted an increase in net earnings in its latest quarter, the company is clearing looking at trimming costs by streamlining operations. It has also altered its sports radio channels, which now incorporate business and comedy segments.
The recent layoffs indicate a major internal upheaval in the telecom company and more changes may be implemented in near future.
BCE Financials
On the financial front, BCE still shows some resilience.
Its net earnings for the fourth quarter 2020 increased by 28.9 per cent to C$ 932 million. Available liquidity at end of 2020 was C$3.8 billion. The telecom also added 147,000 net new retail customers in internet, wireless and IPTV segments.
However, revenue declined by 2.8 per cent while free cash flow went down by a sharp C$782 million or 89.5 per cent on account of operational costs and capital purchases. Adjusted EBITDA also decreased 3.2 per cent in Q4 while total capital expenditures increased by 29.9 per cent to C$1.4 billion.
Bell Media Canada announced C$1 billion to C$2 billion capital investment over the next two years for rolling out 5G networks, fibre and rural Wireless Home Internet (WHI) etc. The company is aiming 900,000 locations to be covered with fibre and WHI by 2021.
The telecom major also raised its quarterly dividend, up from 83.25 cents to 87.5 cents in Q4.
BCE Stock Performance
BCE stock is up almost 2 per cent year-to-date. In February alone, it jumped by 2.3 per cent.
A quick look at the below relative percentage change figures show the BCE stock is performing better than overall sector and benchmark TSX index for most parameters, indicating a positive momentum.
BCE Stock Relative Percentage Change (Source: Refinitiv, Thomson Reuters)
The price to book multiple stands at 2.42 while price to earnings multiple is 20+.
Its gross dividend yield is also an impressive 6.31 per cent. The five-year dividend growth is above 5 per cent.
The shares are up by 23.55 per cent from its 52-week low of C$ 46.03 on March 23 last year.
But it is down nearly 15 per cent from its 52-week high of C$ 65.2750 on February 18, 2020.
BCE stock is sitting at an interesting juncture, from where a growth path is still visible. The recent job cuts look like a move towards strengthening its earnings as the company rebounds from its pandemic lows.
But that being said, BCE did announce an increase in dividend payments, making us question its cash position.
The company’s sudden termination has been heavily criticized and that may impact its ESG factor.
Investors need to remember that BCE continues to be a top income generating TSX stock, with a market cap of C$50 billion and impressive dividend yield.
It may not give great returns but is still a safe stock for the portfolio.
