Is BCE Stock Worth Buying as Low Valuation Meets Execution Risks?

BCE Valuation Looks Cheap Against Key Benchmarks

On a trailing 12-month basis, BCE trades at 6.0X enterprise value to EBITDA, below the Zacks sub-industry average of 8.2X. Its price-to-book ratio of 1.44 also sits below the relevant sub-industry and broader-sector comparisons.

That discount makes valuation one of BCE’s clearest positives. A low multiple, however, is more persuasive when earnings expectations and financial flexibility are also improving.

BCE Earnings Still Face a 2026 Reset

BCE’s second-quarter adjusted EPS increased 3.2% year over year to 65 cents, while revenues rose 1.5%. The quarter showed operating progress, but it did not change management’s full-year expectation for adjusted EPS to decline 5%-11%.

The Zacks Consensus Estimate for fiscal 2026 EPS is $1.83 compared with $2.00 for 2025. Higher depreciation and amortization, increased interest expense and lower tax adjustments remain part of the 2026 earnings pressure.

BCE Leverage Reduces Financial Flexibility

Net debt leverage ended the second quarter at about 3.7X, while interest expense rose 6.1% year over year to C$469 million. BCE remains on track for a 3.5X leverage target by the end of 2027, with asset sales and cash generation supporting that plan.

Rogers Communications Inc. RCI offers useful sector context. Rogers reported 6% free cash flow growth in the second quarter as capital intensity improved to 12.4%, illustrating how lower capital requirements can expand financial flexibility.

BCE AI and Fiber Could Rebuild Growth

Bell AI Fabric had about 335 megawatts of contracted capacity, including the 300-megawatt Saskatchewan facility. The first phase there remains scheduled for the first half of 2027, while BCE has line of sight to about 800 megawatts of AI infrastructure capacity across Canada.

Ziply Fiber produced 9,612 residential fiber-to-the-home net additions in the quarter. Permit submissions accelerated through the period, and BCE expects build activity to increase significantly in the second half of 2026, making construction pace and subscriber penetration key execution markers.

BCE’s Dividend Adds Income but Also a Funding Need

BCE maintained an annualized common dividend of C$1.75 per share, while the stock’s listed dividend yield is 5.43%. That income stream adds to the value case, but it also consumes cash while BCE funds AI infrastructure, U.S. fiber expansion and deleveraging.

TELUS Corporation TU highlights the capital-allocation pressure across Canadian telecom. TELUS reset its quarterly dividend by 55% and is targeting net debt to adjusted EBITDA of about 3.0X or lower by year-end 2028.

BCE’s Scores Capture the Valuation Trade-Off

The bottom line is that BCE looks inexpensive, but the valuation discount comes with real execution demands. Investors have operating catalysts to watch in AI, fiber and cost discipline, while leverage and the 2026 earnings reset keep the near-term risk-reward balanced.

The stock currently carries a Zacks Rank #4 (Sell). BCE has a Value Score of A, Growth Score of F,  Momentum Score of D and VGM Score of C. The Value Score supports the low-valuation argument, but the weaker Growth and Momentum Scores and the Zacks Rank suggest caution until earnings revisions and execution trends improve. 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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