Consumer stock Quebecor a unanimous ‘buy’

Quebecor Inc. is a communications stock with interests in printing, book, magazine and newspaper publishing, broadcasting, cable, telecommunications and retail operations. Quebecor operates via subsidiaries including Quebecor Media Inc., Videotron, Sun Media, TVA Group and Investor’s Digest of Canada recently polled 10 security analysts regarding Quebecor and all 10 recommended the stock as a ‘buy’.

Perhaps surprisingly for a company that made its name in the fields of publishing and the media, Quebecor Inc. (TSX─QBR.B) boasted a robust 2015 third quarter and enjoys the bullish attention of many market watchers as well.

Among them is analyst Robert Peters. From Toronto, Mr. Peters covers Quebecor on behalf of Credit Suisse. Reporting on the release of the company’s financial results for the third quarter of 2015, he reiterates an “outperform” recommendation.

The company reported total revenue of $972 million, up nine per cent year-over-year.

Comparing the third quarter of 2014 and 2015, earnings before interest, taxes, depreciation and amortization (EBITDA) grew by eight per cent to $391 million.

Growth in its media and wireless operations was particularly impressive; revenue increased 21 per cent and 40 per cent year-over-year, respectively.

The media growth was mainly due to more subscription revenue from TVA Sports. For its part, Videotron, Quebecor’s telecommunications arm, added 40,000 cell phone subscribers, for a total of 742,500.

More subtly, revenue from core cable operations rose by one per cent rather than staying flat and losing subscribers as Mr. Peters had forecast.

Going forward, on Nov. 5, Quebecor CEO Pierre Dion said the company would consider selling off licences for Canadian wireless spectrum the company bought in auctions over the last few years with the intent of expanding outside its home province.

Quebecor paid $300 million for the licences. However, the company has indicated that it does not yet find federal regulations appealing enough to take the plunge.

As noted above, Mr. Peters is not the only one with an optimistic view of Quebecor’s future. In fact, we had far more difficulty finding a bear on Quebecor.

Out of the 10 analysts that we polled regarding Quebecor, all 10 recommended it as a “buy”.


Investor’s Digest of Canada, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846

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