Tuesday, January 20, 2015

TELUS is Communicating a Higher Stock Price

TELUS (TU), based in Burnaby, British Columbia, is the largest telecom carrier in Western Canada. The company is a leader in wireless, landline, and Internet services for both voice and data, serving over 13 million customers north of the 49th parallel.
This company has several features which makes this a great investment, including rising sales, spiking earnings, an increase in the number of subscribers, and a hefty dividend that was recently raised. Let’s examine these features in detail, which can make this stock move higher.

Rising Quarterly Revenues and Adjusted Earnings
The company’s revenues and increasing earnings are two catalysts that will boost the stock price. For the first time ever, the quarterly revenues for the third quarter of 2014 exceeded $3.0 billion, jumping 5.4% from the same quarter for the prior year. [All numbers in Canadian dollars.]
In the last couple years, many telecom companies have falling revenues for landlines but make it up with wireless revenues. Not TELUS; the company has generated rising sales for both the landline and wireless sides of the business.

(C$ millions)
Adj. Net Income

In regards to earnings, adjusted net income increased by 6.0% to $387 million. Basic earnings per share for the quarter went up by 3.6% to $0.58, and if you look at adjusted earnings, they improved to the tune of 10% to $0.64.

Net income/share

The stock trades at 18.9 times earnings, which is less than the industry average of 20.0.

Customer Growth and Retention
TELUS generated an incredible 136,000 net new customer connections, plus it produced outstanding record lifetime revenue per customer. In addition, the company has an extremely low record churn, the customer loyalty rate, of 0.9%, for postpaid customers.
The company has very strong customer focus, which helps the company obtain and retain customers. According to Darren Entwistle, the TELUS Executive Chair, “Complaints against TELUS have declined 53 per cent since 2011. Notably, this is the third consecutive year that TELUS has had the lowest number of complaints amongst Canada’s major carriers, reflecting the power of our customer first culture in action.”

Share Repurchase Program
One stalwart driver that can move a stock higher is a share buyback plan. It reduces the number of shares, making each share more valuable from a percentage ownership, plus the buying helps create a floor under the stock price. The company has a share repurchase program in place and completed its purchase of $500 million for 2014.
The company announced that it would accelerate the start of the 2015 stock buyback program by purchasing up to $500 million in additional TELUS shares.

Here is something long-term investors would like, a high dividend, plus a rising dividend policy. Currently, the yield on the stock is 3.9%. The quarterly dividend was bumped up by 11.1% year-over-year to 40 cents per share, which is the eighth increase since May 2011.  The company has a policy of raising the dividend twice a year.

The growth of the company should continue, as long as economic growth continues in Canada, which should happen according to he Bank of Canada’s October 2014 Monetary Policy Report.  As a review, TELUS has generated significant growth in earnings and revenues, rising customer growth, a reasonable price to earnings ratio, and a high yield with a rising dividend guideline. The company management has a way of getting customers and keeping customers. All of this will filter down to the stock price, causing it to rise higher, making it a great buy for growth and income investors. If you are looking for other Canadian stocks, check out the free list of Canada stocks at WallStreetNewsNetwork.com.

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