BCE not keeping on pace with competitors

May 10th, 2010 – 3 Comments

Clearly the market is reacting as it should to BCE’s performance by avoiding the temptation to buy the runt of the litter.


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Telecommunications.


bce2 

Good morning Lou;

I have owned BCE for many years and apart from the dividend it has disappointed year after year in value and on the failed take over. Mr Cope presented hope with selling off non core assets and reducing a bloated work force. Bell’s sponsorship of the winter olimpics was brilliant and has resulted in impressive results this quarter. My question Lou is what will it take for BCE to earn some respect with investors and advance the share price with Telus and Rodgers.

Thank you for your consideration.

 

Hi John,

BCE Inc. ( BCE INC.) has caused lots of suffering and sleepless nights for investors in the past but lets not forget the dividend yield is significantly higher than what is being offered by the competition which suggests that the money that might have been used to grow the company is being put into your pocket.

When you run the numbers the  you can see that the BCE dividend yield is 5.7% while Telus Corp.(T TSX) offers 4.8% and Rogers Communications Inc.( RCI/B.TO) 3.6%.  What you also want to be aware of is the dividend payout ratio. The target payout ratio determined by management at BCE is 65% – 75% of net income , while at Telus it is 55% -65% , and at Rogers Communications its 49%.

What this tells me is that Telus and Rogers have more cash to deploy to grow their businesses than BCE. If you look at the year to date returns on the shares of the three companies. BCE stock is up 4.27% in 2010, Rogers has gained13.32%, and Telus has advanced 15.79%.

 

bce4

When we look at the three year chart for BCE it illustrates a stock that is off its lows from December of 2008 but has met resitance at $31.50. Since March of 2010 it apprears to be range bound with support at $30 and resistance at $31.50.

 

 

 

bce5

The six month chart provides a closeup of the recent price action in the stock which has clearly flattened out since late 2009.

 

 

 

When I look at the BCE story it looks like a company that has not been able to keep up with its competition in areas of growth such as smart phone service which is the new battle ground in telecommunications. Clearly the market is reacting as it should to BCE’s performance by avoiding the temptation to buy the runt of the litter.

MAKE IT A HUGE MAY AND HAPPY CAPITALISM!

 

 

 

The six month chart

Categories: Telecommunications
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media