Rogers Communications Inc. (RCI): what the price assumes

boothcheck covers Rogers Communications Inc. (RCI) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/RCI

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5.2% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~5.1%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.5%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

The balance sheet is both the question and, increasingly, the answer. Rogers carries large debt from the Shaw merger, but leverage improved to 3.8 times in the first quarter of 2026 and management is accelerating the paydown with a step-down in capital spending and rising free cash flow.

The price is strikingly low against the business. At $37.61 the market pays roughly 7 times company-wide operating income, a multiple so low it sits below what even a 5%-a-year decline in operating profit would warrant. Operating margin is about 45%, and nearly every valuation method lands well above the price.

The second engine is hidden asset value. Rogers consolidated its ownership of Maple Leaf Sports & Entertainment in 2025 and is looking to monetize that stake. With free cash flow guided to $4.1 to $4.3 billion in 2026 and capex falling about 30%, the cash-generation profile is inflecting upward even as the headline debt stays high.

Bull Case

Read the balance sheet and it reveals a company moving from a heavy-investment phase into a cash-harvest phase, which is what management's actions signal about its own confidence. Rogers took on substantial debt to acquire Shaw, and the market has fixated on that leverage. But the trajectory is what matters: debt leverage improved to 3.8 times in the first quarter of 2026, continuing the post-Shaw deleveraging, and the company is now actively accelerating it. Management guided 2026 free cash flow to $4.1 to $4.3 billion, an increase of roughly $0.8 billion versus the prior year, and cut expected annual capital spending by about 30% to a $2.5 to $2.7 billion range. Lower capex plus higher free cash flow is the textbook setup for rapid debt reduction, and a management team that guides this way is telling you it expects the cash to come.

The operating business underneath is large, profitable, and growing. First-quarter 2026 total service revenue rose 10% to $4.9 billion, helped by the expanded wireless footprint from Shaw and the consolidation of its sports and entertainment assets. With an operating margin near 45% and a trailing return on equity near 28%, this is a high-margin, scale telecom with the cash flows to service its debt (interest coverage around 4.5 times) and still fund a dividend.

The hidden lever is the sports portfolio. Rogers acquired Bell's 37.5% indirect interest in Maple Leaf Sports & Entertainment in 2025, consolidating ownership of world-class sports franchises, and management has been explicit about intending to monetize the substantial unrecognized value in those assets. That is value sitting on the balance sheet that the 7-times operating-income multiple gives essentially no credit for. For the bull, Rogers is a cash-generative telecom deleveraging quickly, with a step-change down in capex and a sports-asset monetization option on top, trading at a multiple that prices in decline that is not happening.

Bear Case

The structural truth a holder must face is the one the cheap multiple is reacting to: this is a heavily indebted company in a competitive market, and the equity is a levered claim. Net debt sits in the tens of billions, the residue of the Shaw acquisition, and even after improving to 3.8 times, leverage remains high enough that the equity value swings hard on small changes in operating performance or interest costs. The price trades at roughly 7 times operating income not because the market is irrational but because it is discounting that leverage and the risk that the deleveraging plan slips. A telecom carrying this much debt has limited room for error if competition or rates move against it.

The competitive backdrop is the variable with real leverage on the thesis. Canadian wireless and cable are intensely competitive, with aggressive pricing and promotional activity that can pressure the average revenue per user and the margins the bull case depends on. Much of the recent revenue growth came from the Shaw footprint and the consolidation of sports assets rather than from organic subscriber strength, so the underlying organic growth is the number to scrutinize. If price competition intensifies, the high-margin cash flows that fund both the debt paydown and the dividend come under pressure.

The hidden-asset and deleveraging story also carries execution risk. Monetizing the sports stake at a good value is not guaranteed, and a debt-reduction plan that depends on free-cash-flow growth and asset sales can be derailed by a weaker economy or higher refinancing costs. There is also a currency and structure dimension: Rogers reports in Canadian dollars under IFRS, and the U.S.-listed shares add a currency translation between the business and the price a U.S. holder pays, so the per-share comparisons across methods should be read directionally rather than precisely. The methods overwhelmingly say the business is worth more than the price, but they are computed on the reported financials, and the gap is the market's price for the leverage and the competitive risk. If either worsens, a cheap multiple can stay cheap or get cheaper.

Valuation

Inverted, the price implies almost no growth at all. At $37.61 (June 28, 2026) Rogers trades at roughly 7 times company-wide operating income, a multiple so low that the price sits below what even a 5%-a-year operating-profit decline would warrant, computed at a 7% cost of capital (floored above the lower CAPM rate). This is a bound, not a solved point: the market is pricing the business to shrink, which for a scale telecom with a 45% operating margin is a conservative assumption.

The methods overwhelmingly point higher than the price. The exit-multiple DCF, relative-valuation, EV/EBITDA, earnings-power, and excess-return methods all land well above the current quote, and the characterization is that the price is supported by asset-based, earnings-power, relative-multiple, and growth-DCF value, a value-and-asset-supported name rather than a growth bet. Two cautions on the precise figures: several methods produce extreme or unstable outputs here (the zero-growth FCF method and the Peter Lynch and PEG variants print implausible values and should be disregarded), and the financials are reported in Canadian dollars under IFRS while the price is the U.S.-listed share, so per-share method values are best read as directional confirmation that the business is cheap rather than as exact targets.

The reconciliation is straightforward: this is a deeply discounted, high-margin telecom whose low multiple reflects its leverage, not a deterioration in the business. The solvency frame is the operative one. Net debt is large relative to most industrials, but for a telecom it is supported by stable, high-margin cash flows, interest coverage near 4.5 times, and a clear deleveraging path with free cash flow guided to $4.1 to $4.3 billion and capex stepping down about 30%. The valuation question is not whether the business is worth more than 7 times operating income; the methods say it is. It is whether the leverage and Canadian competitive dynamics keep the discount in place, and whether the sports-asset value gets recognized.

Catalysts

The most recent catalyst was the first-quarter 2026 report. Total service revenue rose 10% to $4.9 billion, debt leverage improved to 3.8 times, and management guided 2026 free cash flow to $4.1 to $4.3 billion (up roughly $0.8 billion) while cutting expected annual capital spending by about 30% to a $2.5 to $2.7 billion range. The combination of rising free cash flow and falling capex is the key marker for the deleveraging thesis.

The largest specific catalyst is the monetization of the Maple Leaf Sports & Entertainment stake. Rogers consolidated ownership in 2025 and has said it intends to monetize the substantial unrecognized value in those sports assets. Any transaction, valuation marker, or partial sale would directly address the hidden value the current multiple ignores and could accelerate debt reduction.

The risks to monitor are Canadian wireless and cable price competition (which pressures average revenue per user and margins), the pace of organic versus acquisition-driven growth, refinancing costs on the large debt load, and the path of the deleveraging plan. Continued dividend payments and quarterly leverage-ratio progress are the markers that confirm or challenge the thesis.

Sources: Rogers Communications Q1 2026 results (GlobeNewswire, The Globe and Mail, Grafa, sec.gov 6-K), MLSE transaction disclosures.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• SPOT (Spotify Technology S.A.)
• FY2025 20-F: …of our license agreements, our margins may be materially and adversely affected. To the extent our subscription revenue growth or advertising sales do not meet our expectations, our business, operating results, and financial condition could also be adversely affected as a result of such financial commitments. In…
• FY2025 20-F: …gross profit and gross margin For the year ended December 31, 2025, as compared to 2024, Ad-Supported gross profit increased by €101 million to a gross profit of €330 million, and Ad-Supported gross margin increased from 12% to 18%. The increase in Ad-Supported gross margin was due primarily to a reduction in podcast…
• OMC (OMNICOM GROUP INC.)
• FY2025 10-K: …we are not able to accurately predict, including the geographic regions that may be affected. Business and Operational Risks Clients periodically review and change their marketing and communications requirements and relationships. If we are unable to remain competitive or retain key clients, our business, results of…
• FY2025 10-K: …reduced both operating income and EBITA by $72.4 million, and reduced both operating margin and EBITA margin by 0.4%. 2024 vs. 2023 Operating income for 2024 increased $169.9 million, or 8.1%, to $2,274.6 million, compared to 2023, and operating margin increased to 14.5% from 14.3%. EBITA increased $195.6 million to…
• DKNG (DRAFTKINGS INC.)
• FY2025 10-K: …as the design, development and licensing of sports betting and casino gaming software for its Sportsbook and iGaming product offerings. The Company drives revenue primarily in North America and manages the business activities on a consolidated basis. The determination of reportable operating segments is based on the…
• FY2025 10-K: …development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Furthermore, new competitors, whether licensed or not, may enter the gaming industry. There has also been considerable consolidation among competitors in the entertainment and gaming industries, and such consolidation and…
• NFLX (Netflix, Inc.)
• FY2025 10-K: …members, and as a result, our ability to maintain and/or grow our business will be adversely affected. Changes in competitive offerings for entertainment video could adversely impact our business. The market for entertainment video is intensely competitive and subject to rapid change. Through new and existing…
• FY2025 10-K: …impact on our operations and financial results. (3) See the " Non-GAAP Constant Currency Information" section below for additional details on our use of constant currency revenue. Operating margin for the year ended December 31, 2025 increased by approximately three percentage points as compared to the prior…
• ROKU (Roku, Inc.)
• FY2025 10-K: …uncertainties, and assumptions, including risks described in the section titled "Risk Factors" and elsewhere in this Annual Report, regarding, among other things: • our financial performance, including our revenue, cost of revenue, operating expenses, profitability, and key performance metrics; • the impact of…
• FY2025 10-K: …to grow our user base and gross profit. As a result, our Devices segment revenue may not increase as rapidly as it has in the past, or at all, and, unless we are able to continue to increase our platform segment revenue and grow our user base, we may be unable to grow gross profit and our business will be harmed. For…
• FWONA (LIBERTY MEDIA CORPORATION)
• FY2025 10-K: ) ​ 18 ​ Assets of discontinued operations ​ ​ - ​ 991 ​ Total assets ​ $ 15,398 13,001 ​ The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) from continuing operations before income taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​…
• FY2025 10-K: …charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance…
• LTH (Life Time Group Holdings, Inc.)
• FY2025 10-K: …to as in-center revenue. In-center revenue includes fees for Dynamic Personal Training, aquatics and kids programming and other member services, as well as sales of products at our cafés, and sales of products and services offered at our spas and tennis and pickleball programs. Other revenue Other revenue includes…
• FY2025 10-K: …operational as of the last day of the period. During 2025, we opened 10 centers. (4) Total center square footage (end of period) reflects the aggregate square footage excluding areas used for tennis courts, outdoor swimming pools, outdoor play areas and stand-alone Work, Sport and Swim locations. We use this metric…
• FUN (Six Flags Entertainment Corporation/NEW)
• FY2025 10-K: …outside of the parks. Growth and innovation strategies require significant commitments of management resources and investments may not grow revenues at the rate expected or at all. As a result, the Company may not be able to recover the costs incurred in developing new projects and initiatives, or to realize their…
• FY2025 10-K: …and the quality of its food and entertainment. There may be a material adverse effect on the Company's business, financial condition or results of operations if it is unable to effectively compete with other entertainment alternatives. The operating season at most of the parks is of limited duration, which can…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.