Corus Entertainment Inc (TSX:CJR.B) hit a new 52-week low last month after it released another disappointing quarter where the company failed to grow sales and also recorded a big loss of $936 million. charges.
Corus also announced that it was slashing its dividend and that investors would now be receiving quarterly payments totaling $0.06 a share, or roughly 4.9% of the current stock price.
That was a lot of negative news coming out of Corus in a short period of time, and so it’s no surprise that the stock went on yet another big drop in price. The stock is well under book value and could be a good value buy for investors that can stomach the large declines that Corus has been on lately.
The saving grace for the company is that it is still generating free cash flow, and in the trailing twelve months it has accumulated $325 million of it. Free cash is important not only for paying a dividend, but also for investing in the company’s long-term growth, something which investors may be more concerned about than ever.
However, you shouldn’t overreact to the news.
For one, the dividend was near 20%, which was an obscene yield, and a cut to those payouts will allow the company to pay down its debt.
Second, the net loss for the period was disappointing, but it was also directly the result of a significant impairment charge. If we look at its operating income, Corus saw no change from a year ago, despite seeing a drop in sales.
Corus still remains a solid long-term buy despite all of the noise.
