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Power Corp of Canada (TSE:POW)
TSX:POW
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Power Corp of Canada
(TSX:POW)
71Outperform
Positive Factors
Share Buybacks
There is an estimated $600 million available for continued share buybacks, which could positively impact the stock.
Negative Factors
Corporate Structure
Power Corp's reorganization simplifies its corporate structure but increases reliance on GWO and IGM, making it challenging to achieve NAV growth.
Earnings
Power Corp of Canada missed its earnings expectations, reporting an adjusted EPS of $0.84 compared to the consensus of $1.13/$1.14.
Power Corp of Canada (POW) vs. S&P 500 (SPY)
Market Cap
C$31.36B
Dividend Yield4.48%
Average Volume (3M)1.89M
Price to Earnings (P/E)15.0
Beta (1Y)0.98
Revenue Growth30.81%
EPS Growth-2.47%
CountryCA
Employees40,300
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)3.34
Shares Outstanding588,279,600
10 Day Avg. Volume2,765,526
30 Day Avg. Volume1,885,511
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.90
Price to Cash Flow (P/CF)6.40
P/FCF Ratio1.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$53.00Price Target Upside8.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Power Corp of Canada Business Overview & Revenue Model
Company DescriptionPower Corporation of Canada (POW) is a diversified international management and holding company with interests primarily in the financial services sector across North America, Europe, and Asia. The company operates through its subsidiaries, offering a wide range of financial products and services, including life and health insurance, retirement savings, investment management, and reinsurance. Power Corp is also involved in sustainable and renewable energy through its investments in related companies.
How the Company Makes MoneyPower Corporation of Canada generates revenue primarily through its various subsidiaries, which operate in the financial services industry. The company's main revenue streams come from insurance premiums, fees from investment management services, and income from its asset management business. Its subsidiaries, such as Great-West Lifeco and IGM Financial, contribute significantly to its earnings by providing life and health insurance products, wealth and asset management services, and retirement savings plans. Additionally, Power Corp earns income from its investments in alternative energy and other sectors, further diversifying its revenue base. Strategic partnerships and a focus on sustainable investments also play a role in enhancing the company's financial performance.
Power Corp of Canada Financial Statement Overview
Summary
Power Corp of Canada presents a solid financial standing with consistent revenue growth and stable profitability margins. The company exhibits a balanced approach in handling debt, though high leverage poses a potential risk. Cash flow generation remains robust, providing financial flexibility despite recent declines in operating cash flow.Income Statement
Power Corp of Canada has shown a consistent increase in revenue over the period, with a notable revenue growth rate of 9.70% from the previous year to the TTM. However, there is a slight decline in EBIT and EBITDA margins in the TTM, indicating a potential rise in operational costs or reduced operational efficiency. The net profit margin remains stable at around 4.45%, indicating consistent profitability despite fluctuations in other areas.72
Positive
Balance Sheet
The company's debt-to-equity ratio remains relatively high, suggesting a significant use of leverage. However, the equity ratio stands at 2.79% in the TTM, indicating a low level of equity compared to total assets, which is typical in the insurance industry due to large liabilities. Return on Equity (ROE) is moderate at 9.89%, reflecting decent profitability relative to equity.68
Positive
Cash Flow
Power Corp's cash flow statement shows a strong operating cash flow to net income ratio, suggesting effective cash conversion from operations. The free cash flow growth rate is substantial at 67.61%, indicating improved liquidity and financial flexibility. However, the decline in operating cash flow from previous periods raises concerns about long-term cash generation stability.75
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 50.93B | 46.43B | 48.74B | 69.56B | 64.62B | 48.84B | Gross Profit |
| 51.83B | 46.43B | 48.74B | 69.56B | 64.62B | 48.84B | EBIT |
| 2.14B | 6.97B | 3.09B | 3.04B | 1.59B | 885.00M | EBITDA |
| -256.00M | 4.90B | 5.89B | 5.96B | 4.67B | 4.62B | Net Income Common Stockholders |
| 2.27B | 2.25B | 3.54B | 4.67B | 3.53B | 3.04B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 6.44B | 21.88B | 22.25B | 8.16B | 9.48B | 6.80B | Total Assets |
| 452.30B | 749.48B | 733.65B | 661.63B | 629.10B | 477.25B | Total Debt |
| 17.80B | 20.94B | 21.17B | 19.53B | 21.54B | 18.25B | Net Debt |
| 11.36B | 11.80B | 12.31B | 11.37B | 12.06B | 11.45B | Total Liabilities |
| 414.26B | 708.21B | 689.55B | 617.90B | 590.37B | 440.67B | Stockholders Equity |
| 15.12B | 22.14B | 24.02B | 24.34B | 22.21B | 14.17B |
| Cash Flow | Free Cash Flow | ||||
| 7.98B | 4.76B | 6.70B | 10.49B | 9.71B | 6.62B | Operating Cash Flow |
| 8.74B | 5.93B | 7.50B | 11.05B | 10.10B | 6.62B | Investing Cash Flow |
| -4.67B | -2.62B | -6.50B | -10.58B | -8.41B | -1.48B | Financing Cash Flow |
| -2.82B | -2.80B | -948.00M | -962.00M | 1.64B | -4.63B |
Power Corp of Canada Technical Analysis
Neutral
48.96
Price Trends
45.72
Positive
45.48
Positive
42.28
Positive
Market Momentum
1.07
Positive
52.18
Neutral
46.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:POW, the sentiment is Neutral. The current price of 48.96 is above the 20-day moving average (MA) of 48.53, above the 50-day MA of 45.72, and above the 200-day MA of 42.28, indicating a neutral trend. The MACD of 1.07 indicates Positive momentum. The RSI at 52.18 is Neutral, neither overbought nor oversold. The STOCH value of 46.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:POW.
Power Corp of Canada Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $71.01B | 14.75 | 11.03% | 3.99% | 7.64% | 9.22% | |
73 Outperform | $44.95B | 15.17 | 12.87% | 4.37% | -12.72% | -0.16% | |
73 Outperform | $10.40B | 11.39 | 13.00% | 5.27% | -9.41% | -18.55% | |
71 Outperform | C$31.36B | 15.03 | 10.36% | 4.48% | 30.81% | -2.47% | |
69 Neutral | C$49.41B | 12.68 | 15.52% | 4.19% | -2.40% | 42.24% | |
68 Neutral | $86.08B | 13.72 | 8.34% | 6.37% | 3.72% | -17.99% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
TSE:POW
Power Corp of Canada
48.96
12.03
32.58%
TSE:SLF
Sun Life Financial
78.47
7.64
10.78%
TSE:MFC
Manulife Financial
41.21
10.28
33.22%
TSE:BNS
Bank Of Nova Scotia
68.54
5.10
8.04%
TSE:IGM
IGM Financial
43.79
10.06
29.82%
TSE:GWO
Great-West Lifeco
51.12
10.62
26.22%
Power Corp of Canada Earnings Call Summary
Earnings Call Date: Nov 12, 2024 | % Change Since: 5.77% | Next Earnings Date: Mar 19, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance in core operations with significant growth in key investments and successful asset monetization, despite some challenges in earnings and specific segments. The commitment to returning capital to shareholders through dividends and buybacks was emphasized, with optimistic future outlooks.Highlights
Strong Earnings Growth
Great-West Life and IGM Financial each reported a 12% year-over-year growth in earnings per share, contributing to a 15% increase in net asset value (NAV) across the portfolio.
Increased Value of Investments
Significant increases in the value of Wealthsimple and Sagard, with Wealthsimple's valuation up by 46% and Sagard's general partner value increasing by 39%.
Sale of Peak
The sale of Peak represents a substantial step in monetizing stand-alone businesses, expected to generate a USD 200 million gain.
Dividend Declaration
The Board of Directors declared a quarterly dividend of $0.5625 per share, consistent with the previous quarter.
Positive Share Price Momentum
Share price momentum continued post quarter-end, with NAV per share increasing by an additional 6%.
Lowlights
Decrease in Adjusted Net Earnings
Adjusted net earnings from continuing operations were $542 million, a decrease from $1 billion in the same quarter last year.
Noncash Impairment Charges
Noncash impairment charges at LMPG and Lion affected net asset value, although they were offset by gains in other areas.
Negative Flows in Mackenzie Business
While improvements were noted, Mackenzie is still experiencing negative flows, impacting overall performance.
Company Guidance
During the Q3 2024 earnings call for Power Corporation (POW.TO), executives Robert Orr and Jake Lawrence highlighted several key metrics and developments. The company reported adjusted net earnings of $542 million, down from $1 billion in the previous year, with adjusted net earnings per share at $0.84 compared to $1.52 last year. However, there was a noticeable 15% growth in net asset value (NAV), driven by strong performances from Great-West Life and IGM Financial, both reporting a 12% increase in earnings per share year-over-year. The NAV per share was $57.92 at the end of the quarter, with an additional 6% increase noted post quarter-end to $61.33. The Board declared a quarterly dividend of $0.5625 per share, consistent with the previous quarter. The company also continued its share buyback program, contributing approximately a $0.02 improvement in earnings per share. Significant developments included the sale of Peak, projected to yield a gain of nearly USD 200 million, and a 39% increase in the valuation of Sagard's general partner. Despite some reductions in NAV from Lumenpulse and Lion, the overall portfolio exhibited strong growth, with Wealthsimple's valuation notably increasing by 46%.Power Corp of Canada Corporate Events
Power Corp Reports Mixed Q3 2024 Results
Nov 12, 2024
Power Corporation of Canada reported a decline in net earnings for the third quarter of 2024, with figures dropping to $371 million compared to $997 million in 2023. However, the company’s adjusted net asset value per share increased, reflecting some positive growth. Additionally, the firm’s alternative asset investment platforms raised $1.9 billion in new commitments this year.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.