Power Corporation of Canada (TSX:POW) - Share price, News & Analysis

Q: What is the Fair Price of POW when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

POW (CA$33.12) is trading below our estimate of [[fair value]] (CA$72.76)

POW fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	4/6
Financial Health	5/6
Dividends	6/6

POW Stock Overview

Power Corporation of Canada operates as an international management and holding company in North America, Europe, and Asia.

Rewards

Trading at 54.5% below our estimate of its fair value

Earnings have grown 18.2% per year over the past 5 years

Pays a high and reliable dividend of 5.98%

Risk Analysis

Earnings are forecast to decline by an average of 4.5% per year for the next 3 years

Power Corporation of Canada Competitors

Great-West Lifeco

TSX:GWO

CA$29.3b

Sun Life Financial

TSX:SLF

CA$34.6b

Manulife Financial

TSX:MFC

CA$42.8b

iA Financial

TSX:IAG

CA$6.9b

Price History & Performance

Summary of all time highs, changes and price drops for Power Corporation of Canada
Historical stock prices
Current Share Price	CA$33.12
52 Week High	CA$44.53
52 Week Low	CA$32.47
Beta	1.02
1 Month Change	-9.90%
3 Month Change	-14.31%
1 Year Change	-15.25%
3 Year Change	17.53%
5 Year Change	9.49%
Change since IPO	747.87%

Shareholder Returns

	POW	CA Insurance	CA Market
7D	-1.7%	1.1%	-0.8%
1Y	-15.3%	-6.0%	-5.0%

Return vs Industry: POW underperformed the Canadian Insurance industry which returned -6% over the past year.

Return vs Market: POW underperformed the Canadian Market which returned -5% over the past year.

Price Volatility

Is POW's price volatile compared to industry and market?
POW volatility
POW Average Weekly Movement	3.3%
Insurance Industry Average Movement	4.1%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	17.4%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: POW is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: POW's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1925	n/a	Jeff Orr	https://www.powercorporation.com

Power Corporation of Canada operates as an international management and holding company in North America, Europe, and Asia. It operates through Lifeco, IGM Financial, and GBL segments. The company offers life, disability, critical illness, accidental death, dismemberment, health and dental protection, and creditor insurance; retirement and investment management; asset management; and reinsurance and retrocession; investment advisory, financial planning, and related services; and fund, protection, and wealth management services.

Power Corporation of Canada Fundamentals Summary

How do Power Corporation of Canada's earnings and revenue compare to its market cap?
POW fundamental statistics
Market Cap	CA$22.53b
Earnings (TTM)	CA$2.84b
Revenue (TTM)	CA$67.41b

7.8x

P/E Ratio

0.3x

P/S Ratio

Is POW overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
POW income statement (TTM)
Revenue	CA$67.41b
Cost of Revenue	CA$52.28b
Gross Profit	CA$15.13b
Other Expenses	CA$12.29b
Earnings	CA$2.84b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 05, 2022

Earnings per share (EPS)	4.23
Gross Margin	22.45%
Net Profit Margin	4.21%
Debt/Equity Ratio	44.5%

How did POW perform over the long term?

See historical performance and comparison

Dividends

6.0%

Current Dividend Yield

44%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is POW undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for POW?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for POW. This is calculated by dividing POW's market cap by their current preferred multiple.
What is POW's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$22.53b

POW key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.7x
Enterprise Value/EBITDA	8.3x
PEG Ratio	-1.7x

Price to Earnings Ratio vs Peers

How does POW's PE Ratio compare to its peers?

POW PE Ratio vs Peers

The above table shows the PE ratio for POW vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	7.8x
GWO Great-West Lifeco	9.2x	3.8%	CA$29.3b
SLF Sun Life Financial	9x	6.2%	CA$34.6b
MFC Manulife Financial	4.7x	-18.2%	CA$42.8b
IAG iA Financial	8.5x	11.7%	CA$6.9b
POW Power Corporation of Canada	7.8x	-4.5%	CA$22.5b

Forward PE

Price-To-Earnings vs Peers: POW is good value based on its Price-To-Earnings Ratio (7.8x) compared to the peer average (7.8x).

Price to Earnings Ratio vs Industry

How does POW's PE Ratio compare vs other companies in the North American Insurance Industry?

Price-To-Earnings vs Industry: POW is expensive based on its Price-To-Earnings Ratio (7.8x) compared to the Canadian Insurance industry average (7.8x)

Price to Earnings Ratio vs Fair Ratio

What is POW's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

POW PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	7.8x
Fair PE Ratio	9.2x

Price-To-Earnings vs Fair Ratio: POW is good value based on its Price-To-Earnings Ratio (7.8x) compared to the estimated Fair Price-To-Earnings Ratio (9.2x).

Share Price vs Fair Value

What is the Fair Price of POW when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: POW (CA$33.12) is trading below our estimate of fair value (CA$72.76)

Significantly Below Fair Value: POW is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: POW's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Power Corporation of Canada forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-4.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: POW's earnings are forecast to decline over the next 3 years (-4.5% per year).

Earnings vs Market: POW's earnings are forecast to decline over the next 3 years (-4.5% per year).

High Growth Earnings: POW's earnings are forecast to decline over the next 3 years.

Revenue vs Market: POW's revenue (5.2% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: POW's revenue (5.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: POW's Return on Equity is forecast to be low in 3 years time (11.2%).

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Past Performance

How has Power Corporation of Canada performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

18.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: POW has high quality earnings.

Growing Profit Margin: POW's current net profit margins (4.2%) are higher than last year (3.6%).

Past Earnings Growth Analysis

Earnings Trend: POW's earnings have grown by 18.2% per year over the past 5 years.

Accelerating Growth: POW's earnings growth over the past year (20.8%) exceeds its 5-year average (18.2% per year).

Earnings vs Industry: POW earnings growth over the past year (20.8%) underperformed the Insurance industry 30.7%.

Return on Equity

High ROE: POW's Return on Equity (10.9%) is considered low.

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Financial Health

How is Power Corporation of Canada's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: POW's short term assets (CA$140.0B) exceed its short term liabilities (CA$1.4B).

Long Term Liabilities: POW's short term assets (CA$140.0B) do not cover its long term liabilities (CA$587.0B).

Debt to Equity History and Analysis

Debt Level: POW has more cash than its total debt.

Reducing Debt: POW's debt to equity ratio has reduced from 46.7% to 44.5% over the past 5 years.

Debt Coverage: POW's debt is well covered by operating cash flow (55.8%).

Interest Coverage: POW's interest payments on its debt are well covered by EBIT (9.2x coverage).

Balance Sheet

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Dividend

What is Power Corporation of Canada current dividend yield, its reliability and sustainability?

Dividend Score

6/6

Dividend Score 6/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

5.98%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: POW's dividend (5.98%) is higher than the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: POW's dividend (5.98%) is in the top 25% of dividend payers in the Canadian market (5.4%)

Stability and Growth of Payments

Stable Dividend: POW's dividends per share have been stable in the past 10 years.

Growing Dividend: POW's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (43.8%), POW's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (13.2%), POW's dividend payments are thoroughly covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

5.5yrs

Average management tenure

CEO

Jeff Orr (63 yo)

2.42yrs

Tenure

CA$13,500,737

Compensation

Mr. Robert Jeffrey Orr, also known as Jeff, serves as the Chief Executive Officer and President at Power Financial Corporation since May 9, 2005. Mr. Orr serves as the Chief Executive Officer and President...

CEO Compensation Analysis

Compensation vs Market: Jeff's total compensation ($USD10.45M) is about average for companies of similar size in the Canadian market ($USD8.42M).

Compensation vs Earnings: Jeff's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: POW's management team is seasoned and experienced (5.5 years average tenure).

Board Members

Experienced Board: POW's board of directors are seasoned and experienced ( 12.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: POW insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31