(A Top Pick Feb 02/21, Up 22.2%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with CJRb is progressing well. We are now recommending trailing up the stop (from $3.50) to $5.75. This would all but ensure a minimum investment return of 15%.
Ad revenues are challenged in radio and TV. Corus has controlled costs well and people are still watching specialty channels (cord-cutting is greatly exaggerated). The dividend is safe, and the Shaw family (not the company) controls the company, so this is steady. He may look at this in the future.
Stockchase Research Editor: Michael O'Reilly CJR owns tv and radio stations across Canada and is involved in media production. It pays a good dividend and trades at less than 6x earnings. Recent reported EPS of $0.37 handily beat expectations of $0.31. We see good value now as it trades right at book value. We would buy this with a stop-loss at $3.50, looking to target $6.50 -- 30% upside. Yield 4.94% (Analysts’ price target is $6.43)
(A Top Pick Oct 08/19, Down 20%) It was an income idea that was impacted by COVID. Last year at this time we saw money flowing back toward TV advertisers. There is a little momentum in their advertizing revenue and it is starting to come back.
He used to own it. It's very well managed but in a challenging space. They own good properties. They're ad-dependent, but have a stable subscriber base of their specialty channels. They're a little undervalued. Be watch industry cord-cutting and ad spending. They already cut their dividend, so he assumes it's stable.
Safe dividend? It's down 20-30% recently, but has a stable revenue base from their TV content. There's question over ad revenue declining in traditional media and whether it will return. Has decent free cash flow, but if they reduce their debt load, Corus will likely do quite well. Don't sell it now.
TV, radio and some content. They took on too much debt a few years ago. It has been a deleveraging story. Shaw exited their stake and put a lot of shares into the market, yet one of their management has remained an inside buyer. They are reducing debt and put their dividend on hold for June. It is cheap on pretty much every metric they look at. (Analysts’ price target is $4.87)
Advertisers are roaring back after they realize that they still need TV exposure. Corus sold off hard after Shaw sold its stake, but that was down to CRTC rules. Corus trades at a cheap 20% free cash flow yield. He expects good numbers from Friday's earnings report. (Analysts’ price target is $8.32)
Dividend is nearly 10% (actually around 45), which is a warning sign. He watches a lot less TV and doesn't listen to traditional radio, which are Corus' businesses. He's skeptical of this business.
He looked very hard at it when Shaw sold the block at $6.80. He expected a clean-up trade with Shaw at $6.25, but he still passed. Under $6 has a lot of value. Their radio business was declining and now very small. So, you're buying a TV business with some growth at 5.5x EV to EBITDA vs. comparables at 7-8x. This is at least a trade to the $6.80 level. TV growth is positive but only 3-4%.
Has exceeded its 50-day average. Good for an RRSP? Short-term it just had a breakout to $8 and it wants to go higher to $9.75 as its next resistance. It's had a reverse head-and-shoulders since early-2018. If it hits $10, it could chug higher. Good support at $8.
This is an excellent entry point. There was a spinoff of some of the Shaw-held stocks and the market could not take it all in. The stock fell, so now it is an excellent opportunity for investors to get in. They have come out with a number of strong quarters. 23% free cash flow yield and they are paying down their debt. This is immune to tariffs and trade wars. (Analysts’ price target is $8.13)
They have spent five hours of time on this company. Shaw sold 40%. They kept away. There is no short term catalyst from here. The stock is going to churn from here. It is cheap at 5 times EBITDA. It is less radio and more TV than it used to be. He is tempted below $6.
Corus Entertainment (B) (CJR.B.TO) Frequently Asked Questions
What is Corus Entertainment (B) stock symbol?
Corus Entertainment (B) is a Canadian stock, trading under the symbol CJR.B.TO (previously CJR.B-T on Stockchase) on the Toronto Stock Exchange (CJR.B-CT). It is usually referred to as TSX:CJR.B or CJR.B.TO