Yahoo Finance Why Corus Entertainment Inc. (TSE:CJR.B) Could Be Worth Watching
Corus Entertainment Inc. (TSE:CJR.B), which is in the media business, and is based in Canada, saw significant share price movement during recent months on the TSX, rising to highs of CA$5.93 and falling to the lows of CA$4.97. 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$5.01 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
Is Corus Entertainment still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Corus Entertainment’s ratio of 6.11x is trading slightly below its industry peers’ ratio of 10.02x, 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 grow beyond where it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Corus Entertainment’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Corus Entertainment look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Corus Entertainment, it is expected to deliver a negative revenue growth of -1.5% over the next couple of years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? CJR.B seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on CJR.B, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on CJR.B for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on CJR.B should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Corus Entertainment. You can find everything you need to know about Corus Entertainment in the latest infographic research report. If you are no longer interested in Corus Entertainment, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
