Stock Analysis

Why Corus Entertainment Inc. (TSE:CJR.B) Could Be Worth Watching

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TSX:CJR.B
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While Corus Entertainment Inc. (TSE:CJR.B) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$4.50 at one point, and dropping to the lows of CA$3.16. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Corus Entertainment's current trading price of CA$3.16 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Corus Entertainment’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Corus Entertainment

What's The Opportunity In Corus Entertainment?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.46x is currently trading slightly below its industry peers’ ratio of 7.66x, which means if you buy Corus Entertainment today, you’d be paying a reasonable price for it. And if you believe Corus Entertainment should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Corus Entertainment’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Corus Entertainment generate?

earnings-and-revenue-growth
TSX:CJR.B Earnings and Revenue Growth September 10th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for Corus Entertainment. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in CJR.B’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at CJR.B? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on CJR.B, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for CJR.B, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Corus Entertainment you should be mindful of and 1 of them is a bit unpleasant.

If you are no longer interested in Corus Entertainment, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Corus Entertainment is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About TSX:CJR.B

Corus Entertainment

Corus Entertainment Inc., a media and content company, operates specialty and conventional television networks, and radio stations in Canada and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth0
Past Performance0
Financial Health2
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Undervalued second-rate dividend payer.