Corus Entertainment Inc.’s Q3 Results Send Shares Lower: Should You Buy on the Dip?

Corus Entertainment Inc. (TSX:CJR.B) released third-quarter earnings on July 15, and its stock has reacted by falling over 3%. Is now the time to buy?

| More on:

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

Corus Entertainment Inc. (TSX:CJR.B), one of Canada’s largest integrated media and entertainment companies, announced third-quarter earnings results before the market opened on July 15, and its stock has responded by falling over 3%. Let’s take a closer look at the results to determine if this weakness represents a long-term buying opportunity, or if we should wait for an even better entry point in the trading sessions ahead.

The results that ignited the sell-off

Here’s a summary of Corus’ third-quarter earnings results compared with its results in the same period a year ago.

Metric Q3 2015 Q3 2014
Adjusted Earnings Per Share $0.36 $0.49
Revenue $203.12 million $214.04 million

Source: Corus Entertainment Inc.

Corus’ adjusted earnings per share decreased 26.5% and its revenue decreased 5.1% compared with the third quarter of fiscal 2014. The company’s steep decline in earnings per share can be attributed to its adjusted net income decreasing 24.1% to $31.55 million. Its slight decline in revenue can be attributed to revenues falling in both of its major segments, including declines of 4.6% to $162.77 million in its Television segment and 7.2% to $40.35 million in its Radio segment.

Here’s a quick breakdown of six other notable statistics from the report compared with the year-ago period:

  1. Advertising revenues decreased 10.2% to $97.05 million
  2. Revenue from subscriber fees decreased 2.6% to $84.28 million
  3. Merchandising, distribution, and other revenues increased 11.9% to $21.79 million
  4. Consolidated segment profit decreased 13.8% to $68.7 million
  5. Free cash flow increased 6.8% to $63.42 million
  6. Ended the quarter with $43.85 million in cash and cash equivalents, an increase of 14.7% from the beginning of the quarter

Corus also announced that it will be maintaining its monthly dividend of $0.095 per share, and the next payment will come on August 31 to shareholders of record at the close of business on August 17.

Should you buy on the dip?

It was a weak quarter for Corus, so I think the weakness in its stock is warranted. However, I also think it has led to an attractive long-term buying opportunity.

First, Corus’s stock now trades at just 9.1 times fiscal 2015’s and 2016’s estimated earnings per share of $1.74, which is inexpensive compared with its five-year average price-to-earnings multiple of 12.9 and the industry average multiple of 21.3. I think the company’s stock could consistently command a fair multiple of at least 12, which would place its shares upwards of $20.75 by the conclusion of fiscal 2016, representing upside of more than 31% from today’s levels.

Second, Corus pays an annual dividend of $1.14 per share, giving its stock a very high 7.2% yield at current levels, which is more than double the industry average yield of 3%. The company has also increased its annual dividend payment for five consecutive years, and its increased amount of free cash flow could allow this streak to continue for another five years.

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

Should you invest $1,000 in CIBC right now?

Before you buy stock in CIBC, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and CIBC wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Joseph Solitro has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »