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snootchiebootchies · 06-30-2018, 11:33 PM

I was reading about the AT&T / Time Warner merger and if you crunch the numbers, Time Warner was valued at 15x FCF after accounting for net debt. Obviously, Time Warner is a much larger media/entertainment company but its sale does show that Corus is trading at a substantial discount. There are likely reasons Corus should be discounted: Corus' debt to cash flow ratio is worse (but only slightly, surprisingly), much smaller company, higher payout ratio (even after the div cut), etc. But on the other hand, there are reasons why Corus deserves a premium valuation, such as my belief that Canadian media/entertainment companies will be a protected sector, especially in light of the protectionist policies being pursued by the Americans (although there are people on this forum who clearly do not believe that to be true). But even with a discounted 10x FCF valuation, Corus shares would be valued at around $7. That's a 40% increase from here plus the 5% dividend.

I haven't bought any CJR.B yet and am going to wait. Could be a real good opportunity here if shares trade lower during the summer.

06-30-2018, 11:33 PM	#46
snootchiebootchies Powerplay Quarterback Join Date: Jun 2009 Exp:	I was reading about the AT&T / Time Warner merger and if you crunch the numbers, Time Warner was valued at 15x FCF after accounting for net debt. Obviously, Time Warner is a much larger media/entertainment company but its sale does show that Corus is trading at a substantial discount. There are likely reasons Corus should be discounted: Corus' debt to cash flow ratio is worse (but only slightly, surprisingly), much smaller company, higher payout ratio (even after the div cut), etc. But on the other hand, there are reasons why Corus deserves a premium valuation, such as my belief that Canadian media/entertainment companies will be a protected sector, especially in light of the protectionist policies being pursued by the Americans (although there are people on this forum who clearly do not believe that to be true). But even with a discounted 10x FCF valuation, Corus shares would be valued at around $7. That's a 40% increase from here plus the 5% dividend. I haven't bought any CJR.B yet and am going to wait. Could be a real good opportunity here if shares trade lower during the summer.