Corus Entertainment Inc. (TSX:CJR.B) released its quarterly results on Wednesday, which missed expectations and were down from a year ago. Sales declined 2% and adjusted earnings per share were also down three cents.
By any metric you can image, this was a big market overreaction.
Dropping advertising revenues have sent off panic buttons everywhere that perhaps television won’t be able to keep up with the popularity of online streaming services like Netflix, Inc. (NASDAQ:NFLX). This of course is not a new development, and while television has lost subscribers, it still has a strong base, and many cord cutters often return after finding sub-par options for online content.
In addition, Corus owns or has the rights to many of the most popular channels in Canada, including History, HGTV, Disney Channel, and many others. This is particularly important because Corus can dictate how that content is viewed online, if at all.
While Corus hasn’t gone the way of offering all of its channels online yet without a television subscription, that is an avenue that could help grow advertising revenues. Canadians don’t have many options for content online, and so the losses from cord cutting are not going to be as impactful here as they would be south of the border.
Currently the share price is trading well under its book value and it could be a great time for investors to buy. In addition, the company’s dividend yield is now up over 12% as a result of the decline in price.
The last time the share dipped this low was nearly two years ago, and it went on to make a great recovery afterwards.
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