MENU

Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

Why Corus Entertainment Inc.’s Stock Has Fallen Over 6% Today

Corus Entertainment Inc. (TSX:CJR.B), one of the world’s leading media and content companies, announced its third-quarter earnings results this morning, and its stock has responded by falling over 6%.

Let’s take a closer look at the quarterly results, one other important announcement made by the company, and the fundamentals of its stock to determine if we should use this weakness as a long-term buying opportunity or a warning sign to avoid it for the time being.

A quarter of mixed growth

Here’s a quick breakdown of the most notable statistics from Corus’s third quarter ended on May 31, 2016, compared with the same period a year ago:

Metric Q3 2016 Q3 2015 Change
Adjusted net income attributable to shareholders $52.95 million $31.55 million 67.8%
Adjusted basic earnings per share $0.34 $0.36 (5.6%)
Revenues: television segment $321.18 million $162.77 million 97.3%
Revenues: radio segment $39.65 million $40.35 million (1.7%)
Total revenues $360.82 million $203.12 million 77.6%
Segment profit: television $127.97 million $64.08 million 99.7%
Segment profit: radio $9.67 million $9.46 million 2.2%
Total segment profit $130.19 million $68.7 million 89.5%
Cash provided by operating activities $78.63 million $69.28 million 13.5%
Free cash flow $67.95 million $63.42 million 7.1%

Dividends? Yes, please

Corus also announced that it would be maintaining its monthly dividend of $0.095 per share in August, September, and October, and those payments will come on August 31, September 30, and October 31 to shareholders of record at the close of business on August 15, September 15, and October 17, respectively.

What should you do with Corus’s stock today?

It was a great quarter overall for Corus, and it showed that its acquisition of Shaw Media Inc., which closed on April 1, is already providing a major boost to its revenues and cash flows. With this being said, I do not think the sell-off in its stock is warranted and actually represents a great buying opportunity for the long term for two primary reasons.

First, its stock is undervalued. Corus’s stock now trades at just 10.2 times fiscal 2016’s estimated earnings per share of $1.26 and a mere nine times fiscal 2017’s estimated earnings per share of $1.42, both of which are very inexpensive compared with its five-year average price-to-earnings multiple of 13.4. These multiples are also incredibly inexpensive given the earnings growth it could achieve by maximizing the cost synergies from its acquisition of Shaw Media.

Second, it has one of the best dividends in the market. Corus pays an annual dividend of $1.14 per share, which gives its stock a very high yield of about 8.9%, and this yield is supported by its ample free cash flow generation. Investors must also note that the company’s 4.6% dividend hike last year has it on pace for 2016 to mark the 13th consecutive year in which it has raised its annual dividend payment, making it both a high dividend and dividend-growth play.

With all of the information provided above in mind, I think all Foolish investors should strongly consider using the post-earnings weakness in Corus Entertainment’s stock to begin scaling in to long-term positions.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.