BCE (TSX:BCE) stock has had its fair share of issues over the last year. The company has seen its share price shrink lower and lower after the merger of its biggest competitors, and numerous issues with the Canadian Radio and Television Commission (CRTC).
But the big question is whether it can recover. Because if it can, BCE stock could be a stellar buy on the TSX today.
What happened
Shares of the company have continued to wax and wane over the last year, including most recently during its earnings report. BCE stock saw third-quarter profit fall by 8% year over year, with revenue rising only mildly. The lower profit came from higher financing costs due to higher interest rates, more debt, and higher expenses.
The issue is that these expenses were from its rapid growth, growth that the company now believes it will have to cut back. This comes from the CRTC stating that BCE stock and other telecommunications companies will need to share their wireline services with other smaller telecom companies. The aim of the move is to create a more competitive marketplace.
However, BCE stock heavily disagreed and stated it would be cutting back the roll out to bring the network to less people in this case. So the situation could make a bad situation even worse in the near future.
Analysts weigh in
Analysts were expecting higher earnings, and revenue far higher near $6.1 billion. However, analysts also felt that results were in line with expectations, and the quarter was “steady.” Furthermore, they foresee that the company is certainly on the path to its full-year guidance.
However, BCE stock now has some work to do towards its fourth quarter – a quarter that is now mired in CRTC feedback. And going into 2024, the company and other telecommunications companies will need to face more issues.
While BCE stock and others ended up having a stronger end of the year, with November bringing shares of BCE stock up 10%, the stock still has work to do. So let’s get into what investors should watch for in 2024.
Licensing
Overall, analysts certainly are more positive about the next year when it comes to the Canadian telecommunications sector. Lower interest rates and softening inflation should start to leave more cash in investor pockets.
However, the situation has yet to stabilize, which is why it’s best to be careful with this sector. Especially in the face of licensing issues coming from the CRTC in terms of content from the United States. Meanwhile, analysts believe there will be lower growth for BCE stock compared to its peers. Even for the foreseeable future.
While the stock should perform well in the near term, BCE stock will need to make some big moves if it hopes to retain the top spot as Canada’s largest telecommunications company. However, new internet additions (even though cut back recently) should continue to bring in strong free cash flow in the next few years.
Bottom line
So with shares down 17% from 52-week highs, up 10% in the last month, and a dividend yield of 7.08%, is BCE stock worth it? Perhaps, but only once there are some signs of growth and good news. If you’re a long-term holder, honestly it could be worth the wait. But if you may need the cash in the next year or two, it may be best to avoid BCE stock for now.
