Income Investors: Should You Buy the Dip at Corus?

Corus Entertainment (TSX:CJR.B) is a Toronto-based media and content company. Legacy media companies like Corus are struggling in an evolving environment. The rise of streaming services and consistent cable cutting has severely limited the growth of Corus.

Still, the stock has performed well in 2019. Shares have climbed 32.5% in 2019 as of close on May 30. The company released its second-quarter 2019 results on April 5. It is expected to release its third quarter results on June 26. Shares have plunged 17% over the past month.

The stock fell after Shaw Communications (T.SJR.B) announced that it would sell its stake in Corus for $548 million.

Under the deal, Shaw agreed to sell 80 million Class B shares at $6.80 per share. Corus stock was priced at $6.31 as of close on May 30.

Corus had a solid second quarter as it reported a 4% year-over-year increase in consolidated revenues to $384 million. Free cash flow rose to $83.9 million over $82 million in Q2 2018 but in the first six months cash flow is down to $126 million from $165 million in 2018.

Television performance has been a strong point in Corus’ segments as advertising revenues have increased 11% from the prior year.

Corus last announced a quarterly dividend of $0.06 per share which represents a 3.8% yield. The stock has a forward P/E of 7 and had an RSI of 31 as of close on May 30. This puts Corus very close to technically oversold territory. Shares are worth a look at a discount ahead of its next earnings report.