This Top Canadian Stock Just Exploded After Earnings

This Canadian stock just reported strong earnings, sending its share price soaring. Despite this massive rally, though, the stock is still mighty cheap!

| More on:
stocks rising

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Over the past year, as the market has been recovering and continuing to rally higher, it’s understandably becoming harder to find top Canadian stocks to buy.

One stock, though, that has been cheap for a while now and continues to impress with its strong performances as of late is Corus Entertainment (TSX:CJR.B).

Corus is a media company that earns almost all of its revenue from its T.V. assets. The company was in turnaround mode, even before the pandemic hit, with a significant debt load that had investors wary of the stock.

So, when the pandemic hit, many investors bailed, making Corus one of the cheapest Canadian stocks on the market. And although it’s had an impressive recovery over the last year, up 128%, the company continues to show that it’s trading undervalued.

Corus’s recent earnings report

On Tuesday, the Canadian stock reported earnings for the third quarter of its fiscal 2021 year, and the stock immediately skyrocketed by more than 6%.

One of the first things that caught the attention of investors is the significant amount of revenue Corus did, considerably outpacing estimates.

T.V. advertising revenue grew by 22% year over year. Meanwhile, the company once again gained streaming subscribers. Even content revenues were up considerably, gaining more than 20% in the quarter and 15% year to date.

What’s most attractive about this revenue growth is that it came from all segments of the business. So, Corus looks to be firing on all cylinders.

In the past, I’ve talked about what a cash cow Corus is and the ability it has to earn free cash flow and make a profit. And in the third quarter, it once again showed just how strong a business it has.

The Canadian stock managed to earn over $50 million in free cash flow on just $403 million of consolidated revenue. Furthermore, Corus managed to report earnings per share (EPS) of $0.21.

It’s not just the monetary amount that makes Corus’s earnings strong. Reading through the report, it looks as though the company is positioned well to continue growing.

It’s continued to pay down debt, and the company is in a much better financial position. And when you consider Corus’s insanely cheap valuation, it’s clear that Corus is one of the top Canadian stocks to consider for a long-term investment today.

Corus’s valuation shows it’s one of the cheapest Canadian stocks to buy now

That $0.21 of EPS brings Corus’s total through the first three quarters of the year to $0.77. Meanwhile, its stock is trading for just $6.31.

Assuming Corus can just match what it did in the fourth quarter of 2020 (which is conservative, considering its outpaced 2020 in each of the first three quarters of 2021), it would end up with $0.86 of EPS for fiscal 2021.

So, with the stock trading at just $6.30, Corus is extremely cheap. The price-to-earnings ratio is only 7.3 times. This makes Corus one of the cheapest stocks on the market.

In the past, it made sense the Canadian stock traded at a discount, as investors were concerned about its debt load. Over the past year, though, Corus has shown it’s got it under control.

So, with the stock trading this cheap and paying a dividend that yields 3.8%, it’s one of the top Canadian stocks for investors to consider today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »