RE:Corus top pick Agreed Yassine. Corus is certainly under accumulation right now. With their 50 percent sale of telelatino they did say on call that $19 million is going to debt repayement. Given their current cash flows they have been paying debt down by $60 million a quarter (over double what the banks required). At that rate for current quarter they can pay down $80 million (60+20) so the new net debt goes to $1,72 billion and segment profit of $610 for last 4 quarters produces a debt to profit ratio of 2.87 from 3.05 most recent quarter. With such strong cash flows this debt is being paid down rapidly. At that point I think Corus should than move to share buybacks or investments in content/kin media and new digital endeavours. No need to pay down debt in such a low interest rate environment we have today. You actually want to add debt if you can generate growth (aka Netflix business model).
Cost of debt was 4.6 percent as reported last quarter so really does not make sense to pay any of it off when you can generate margins of 32 percent and earn ebitda of $610 on capital base of $1.7 billion for a rate of return of 36 percent on capital.
This is being done just to appease the bankers as the opportunity in media space (especially with content) is where all the action is. Apple, Disney, Netflix, Amazon ...... are all trying to get into the action and do more. This poisitions Corus very well for next number of years.
Recent international sales of content will start showing up on the revenue line soon to further drive growth.
Stock price still way underpriced as $7.60 by a significant amount. I am reallocating some of my cash towards Corus from other investments as it continues to stay reasonably priced.