BCE Stock Climbs 10.2% in One Month. Can the Rally Sustain Its Pace?

BCE Inc. BCE shares have climbed 10.2% in the past month, giving the stock a sharp near-term lift even as its earnings outlook remains under pressure. The move raises a key question: can improving operating trends keep the rally going, or has the share price moved faster than the fundamentals?

The second-quarter report offered some support through higher revenues and adjusted earnings. Heavy investment, leverage and declining earnings estimates, however, still limit the case for assuming the recent pace can continue.

BCE’s Q2 Beat Gives the Rally Some Support

BCE’s adjusted EPS increased 3.2% year over year and beat the consensus mark by 2.2%. Operating revenues rose 1.5% and also came in above expectations, giving the rally some fundamental backing.

Combined revenues from Ateko and Bell Cyber increased 29%, while Bell Media and Ziply Fiber contributed to consolidated growth. These businesses give BCE several operating areas that can support the recent share-price strength if execution holds.

BCE Spending and Leverage Could Cap Momentum

Capital expenditures rose 41.5% in the second quarter to C$1.08 billion as BCE funded Bell AI Fabric and Ziply Fiber. Free cash flow fell 9.5% to C$1.04 billion, even as cash flows from operating activities increased 11%. Most of the roughly C$1.3 billion of expected 2026 Saskatchewan AI data-center capital spending is scheduled for the second half.

Net debt leverage was about 3.7X at June 30, while interest expense increased 6.1% to C$469 million. Balance-sheet pressure is also a broader sector issue. TELUS Corporation TU reset its quarterly dividend by 55% while targeting net debt to adjusted EBITDA of 3.0X or less by year-end 2028. Rogers Communications Inc. RCI reported 6% free cash flow growth as capital intensity fell to 12.4%.

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BCE Fiber and Media Offer Follow-Through

Residential fiber-to-the-home net additions across Bell CTS Canada and Ziply reached 54,883, up 14.5% year over year and contributing to 14.2% Internet revenue growth. That gives BCE a measurable operating driver beyond the recent stock move.

Crave subscriptions increased 23% to 5.07 million, while Bell Media revenue rose 8.9%. Bell AI Fabric had about 335 megawatts of contracted capacity, with the first phase of the Saskatchewan facility expected to begin operations in the first half of 2027. Continued progress across these areas could help sustain investor interest.

BCE’s Signals Still Favor Caution

BCE’s rally has some operating support, but falling earnings estimates, elevated spending and leverage argue against assuming the past month’s pace can persist. The next leg likely depends on whether fiber, media and AI progress can translate into stronger free cash flow and earnings visibility.

The stock currently carries a Zacks Rank #4 (Sell). Its Style Scores are split, with a Value Score of A, Growth Score of F, Momentum Score of D and VGM Score of C. The Value Score points to relative valuation appeal, but the weaker Growth and Momentum Scores and middling VGM Score do not reinforce the recent rally. Combined with negative estimate revisions, the near-term setup still favors caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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