Before analyzing a company for investment, it’s important to have a perspective on how well the business has performed. Because at the end of the day, if you are an investor, you are buying the business. The FAST Graphs™ presented with this article will focus first on the business behind the stock. The orange line on the graph plots earnings per share since 2004. A quick glance vividly reveals the historical operating record of the company.
Canadian-based media and entertainment company Corus Entertainment Inc. (TSE:CJR.B) is a market leader in specialty television and radio with additional assets in pay television, television broadcasting, children’s book publishing, children’s animation and animation software.
This article will reveal the business prospects of Corus Entertainment Inc. (TSE:CJR.B) through the lens of FAST Graphs – fundamentals analyzer software tool. Therefore, it is offered as the first step before a more comprehensive research effort. Our objective is to provide companies that have excellent historical records and appear reasonably priced based on past, present and future data and expectations.
A quick glance at the graph itself and the orange earnings justified valuation line will tell the readers volumes about how well the company has historically been managed and performed as an operating business. Simply put, the reader should ask whether this example is worthy of a greater investment of their time and effort based on the data as presented and organized. The FAST Graphs’ unique advantage is the graphical articulation of the price value proposition.
Earnings Determine Market Price: The following earnings and price correlated FAST Graphs™ clearly illustrates the importance of earnings. The Earnings Growth Rate Line or True Worth™ Line (orange line with white triangles) is correlated with the historical stock price line. On graph after graph the lines will move in tandem. If the stock price strays away from the earnings line (over or under), inevitably it will come back to earnings.
Earnings & Price Correlated Fundamentals-at-a-Glance
A quick glance at the historical earnings and price correlated FAST Graphs™ on Corus Entertainment Inc. (TSE:CJR.B) shows a picture of undervaluation based upon the historical earnings growth rate of 14.3% and a current P/E of 13. Analysts are forecasting the earnings growth to continue at about 8.5%, and when you look at the forecasting graph below, the stock appears undervalued (it’s inside of the value corridor of the five orange lines - based on future growth).
Corus Entertainment Inc: Historical Earnings, Price, Dividends and Normal P/E Since 2004
Performance Table Corus Entertainment Inc
The associated performance results with the earnings and price correlated graph, validates the principles regarding the two components of total return: capital appreciation and dividend income. Dividends are included in the total return calculation and are assumed paid, but not reinvested.
When presented separately like this, the additional rate of return a dividend paying stock produces for shareholders becomes undeniably evident. In addition to the 6.7% capital appreciation (green circle), long-term shareholders of Corus Entertainment Inc, assuming an initial investment of $1,000, would have received an additional $338.91 in dividends (blue highlighting) that increased their total return from 6.7% to 8.7% per annum versus 4.7% in the S&P 500.
The following graph plots the historical P/E ratio (the dark blue line) in conjunction with 10-year Treasury note interest. Notice that the current price earnings ratio on this quality company is as low as it has been since 2004.
A further indication of valuation can be seen by examining a company’s