Corus Entertainment (TSX: CJR.B), a prominent player in the Canadian media and content industry, recently unveiled its financial results for the first quarter of fiscal 2024. Although the company experienced a decline in consolidated revenue and segment profit, its net income and free cash flow showed resilience. Is this beaten down stock, which trades at just 4 times its estimated future profits, worth investing in?
Corus’ revenue in Q1 was down 14% to $369.9 million. Its segmented profit of $120.8 million declined by 8% year over year. However, overall net income of $32.7 million rose by 4% year over year, while free cash flow of $23.7 million grew by 14%. A big reason for the improved bottom line and stronger cash flow was due to cost reductions. In the period, the company’s cost of sales and selling, general, and admin costs totaled $249.1 million -- $50 million less than what it reported a year earlier.
The company has been affected by the strikes in Hollywood last year. But it says that new episodes for scripted series will begin arriving late in Q2, which should help bolster revenue. On the flip side, however, the economic challenges and the potential for a recession this year could dimmish the strength of the ad market.
Overall, it could be another challenging year for Corus, which is coming off a tough 2023 where its share price declined by 67%. The stock’s low valuation can make now an enticing time to invest in Corus, but investors shouldn’t expect a quick turnaround.
