TSX:BCE, a 5G growth stock to buy?

Summary

  • The company delivered quarterly results as businesses resort to a pre-pandemic level.
  • The company is developing the 5G infrastructure, which is one of the growth drivers.
  • Read to know more

Stocks of Canadian telecom giant BCE Inc (TSX: BCE) stock closed at C$ 63.15 apiece, posting single-day gain of 1.22 per cent in the backdrop of the second quarter 2021 results on August 5, 2021.

The market analysts believes that financial results has exceeded expectations. The stock hit its 52-week high a day before to the announcement of the quarterly results.

BCE stock seems to be returning to its pre-pandemic level with big sequential improvements as Canadians embrace next-generation 5G network. This is reflected in the increase in mobile usage and retail and residential internet. The company further plans new initiatives are planned to built and develop the 5G infrastructure.

 

BCE stock performance and dividend

 

BCE is one of Canada’s largest telecommunication companies. The C$57.13-billion company provides internet, TV, broadband wireless, and communication services.

The telecom stock is trading 0.53 per cent above its 52-week high of C$ 62.81 attained on August 4, 2021, and is trading 20.24 per cent above its 52-week low of C$ 52.52 attained on November 6, 2020

The stock price climbed up nearly 19 per cent over the last nine months and 12 per cent in the past year. On a year-to-date (YTD) basis, it increased by 16 per cent.

To its investors, the company is scheduled to pay its next set of quarterly dividends of C$ 0.87 on October 15, 2021. The historical dividend yield was 5.54 per cent, and the 3-year average dividend growth rate was 4.37.

 

BCE stock fundamentals

The quarterly report highlights a 6.4 per cent year-over-year (YoY) growth of operating revenue in Q2 FY2021 to reach C$ 5,698 million from C$5,354 in Q2 FY2020.

The growth was driven by growth in wireless, media, and residential internet. The service revenue grew by 5 per cent YoY, and product revenue increased by 18.8 per cent.

The adjusted EBITDA was C$ 2,476 million, grew by 6.2 per cent YoY, and the net earnings stood at C$ 734 million, up 149.7 per cent YoY.

The retail internet, wireless, and phone-connected devices are up 75 per cent YoY. The company partnered with AWS and google cloud to strengthen its 5G leadership position on the technology front. This partnership is estimated to benefit nearly 70 per cent of the country’s population.

The management commented that the impact of the pandemic on normal business operations was reduced to a large extent during the quarter compared to the situation a year ago.

On the valuation metrics, the company holds earnings per share (EPS) of 2.72, the price to earnings (P/E) ratio of 22.90, the debt-to-equity (D/E) of 1.60.

The return on equity (ROE) was 13.26 per cent, and return on assets (ROA) was 3.79 per cent.

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