What’s going on with BCE stock after Q3 earnings?

Shares of B.C (TSX:BCE) rose as much as 5.6% to $33.50 each this morning. Although the stock gave up some of these gains later in the session, it was still trading with a strong gain of 4% around 10:30 a.m. ET. And even if the stock manages to close out this trading session here, it would post its best single-day percentage gain in almost six months.

Let’s take a look at what’s behind this move in BCE stock.

A sharp profit recovery and a boost for free cash flow

Today’s rally in BCE stock comes after the Canadian communications giant reported a strong recovery in third quarter (Q3) results, driven in part by a one-time gain from the sale of its stake in Maple Leaf Sports and Entertainment. For the quarter, the company’s net income rose to $4.6 billion, compared to a loss in the same quarter last year.

More importantly, BCE’s free cash flow rose 21% to $1 billion, giving investors more confidence in its dividend-paying ability.

Investors also cheered the fiber growth and buyback news

Investors also responded positively to BCE’s continued expansion in high-speed internet, wireless networking and artificial intelligence (AI)-based services. Notably, the company added more than 26,000 residential Internet customers last quarter, and its acquisition of Ziply Fiber in the US is already contributing to revenue and profit growth.

Complementing the positive sentiment, BCE also renewed its share repurchase program to buy back preferred shares. For long-term investors, this quarter is a signal that BCE’s fundamentals could be stabilizing after a difficult year, while the company continues to offer a healthy dividend.