Company Reports

Power Corporation of Canada reported a good set of numbers in the first quarter. The firm reported adjusted net earnings of CAD 727 million or CAD 1.12 per share in the first quarter, compared with CAD 588 million or CAD 0.88 per share in the first quarter of the previous year. The company has declared a quarterly dividend of 56.25 cents per share, which represents a 5.6% dividend yield as per the current stock price. Power Corporation's adjusted net asset value, or NAV, per share stood at CAD 53.10 as of the end of first-quarter 2024, which compares with CAD 53.53 at the beginning of the quarter. The company has continued to allocate capital to buybacks given the difference in NAV and share price of the company and has repurchased approximately CAD 97 million of shares in the first quarter. We are increasing our fair value estimate for the firm to CAD 42.00 from CAD 40.00 after incorporating the first-quarter results.

Power Corporation of Canada is a holding company and derives most of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. We estimate that Power Corporation's stake in two publicly listed companies accounts for approximately 85% of its overall value. The company has stated that rather than diversifying across industries, Power Corp. will focus on the financial services sector. The company simplified its ownership structure and reduced corporate costs after it acquired all the shares of Power Financial in a restructuring effort in 2020.

Power Corporation of Canada ended the year with a decent set of numbers that were mainly driven by Great-West Life’s performance. The firm reported adjusted net earnings of CAD 579 million or CAD 0.89 per share in the fourth quarter, compared with CAD 395 million or CAD 0.59 per share in the fourth quarter of the previous year. The company has declared an increase in quarterly dividend to CAD 56.25 cents per share, up 7.1% compared with the previous quarterly dividend. The current dividend represents a 5.6% dividend yield as per the current stock price. Power Corporation's adjusted net asset value, or NAV, stood at CAD 53.53 per share as of the end of fourth-quarter 2023, which compares with CAD 48.26 per share at the beginning of the quarter. The company has continued to allocate capital to buybacks given the difference in NAV and share price of the company and has repurchased approximately CAD 583 million of shares in 2023. We are maintaining our CAD 40.00 fair value estimate for the firm after incorporating the fourth-quarter results.

Power Corporation posted a good set of numbers in the third quarter driven by Great-West Life and GBL. The firm reported adjusted net earnings of CAD 1.007 billion or CAD 1.52 per share in the third quarter, compared with CAD 520 million or CAD 0.78 per share in the third quarter of the previous year. We note that the third-quarter results were positively impacted by a nonrecurring gain of CAD 323 million in GBL due to the deconsolidation of Webhelp following the previously announced combination of Webhelp with Concentrix Corporation. The firm has declared a quarterly dividend of CAD 52.50 cents per share representing a 6.0% dividend yield as per the current stock price. Power Corporation's adjusted net asset value, or NAV, per share stood at CAD 48.26 as of the end of third-quarter 2023, which compares with CAD 48.86 at the beginning of the quarter. The firm has continued to allocate capital to buybacks given the difference in its NAV and share price and has repurchased approximately CAD 452 million of shares in 2023. We are reducing our fair value estimate to CAD 40.00 from CAD 41.50 after incorporating the third-quarter results.

Power Corporation of Canada is a holding company and derives most of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. We estimate that Power Corp.'s stake in two publicly listed companies accounts for approximately 85% of its overall value. The company has stated that rather than diversifying across industries, Power Corp. will focus on the financial services sector. The company simplified its ownership structure and reduced corporate costs after it acquired all the shares of Power Financial in a restructuring effort in 2020.

Power Corporation of Canada’s second-quarter results were largely in line with our expectations, as the performance at its largest subsidiaries Great-West and IGM Financial remained stable. The firm reported adjusted net earnings of CAD 847 million or CAD 1.27 per share, compared with CAD 647 million or CAD 0.97 per share in the prior-year second quarter. The adjusted earnings from the publicly listed operating companies (Great-West, IGM, and GBL) were reported at CAD 842 million, compared with CAD 715 million in the previous year. The company has declared a quarterly dividend of 52.50 cents per share, representing a 5.4% dividend yield as per the current stock price. Power Corporation's adjusted net asset value stood at CAD 48.86 as of the end of the second quarter, which compares with CAD 46.89 at the beginning of the quarter. We are maintaining our CAD 41.50 fair value estimate for the firm after incorporating results.

Power Corp. of Canada reported middling first-quarter results as Great-West Life remained solid but other stand-alone businesses, including alternative asset management platforms Sagard and Power Sustainable, struggled. The firm reported adjusted net earnings of CAD 514 million, or CAD 0.77 per share, compared with CAD 442 million, or CAD 0.65 per share, in the first quarter of the previous year. Adjusted earnings from the publicly listed operating companies (Great-West, IGM Financial, and Groupe Bruxelles Lambert) were reported at CAD 682 million in the first quarter compared with CAD 613 million in the previous year. The company declared a quarterly dividend of 52.50 cents per share, representing a 5.8% dividend yield at the current stock price. Power Corp.'s net asset value per share stood at CAD 46.89 as of the end of the first quarter of 2023, up from CAD 41.91 at the beginning of the quarter primarily because of the price appreciation in Great-West’s stock price. We are maintaining our CAD 41.50 fair value estimate for Power Corp. after incorporating the first-quarter results.

We are increasing our fair value estimate for no-moat-rated Power Corporation of Canada to CAD 41.50 per share from CAD 40.00 per share as we increase the fair value estimate of Power Corp.'s stake in Great-West Life after incorporating its latest results. Our valuation of Power Corp. is a sum-of-the-parts approach based on our valuations for the underlying ownership interest in Great-West Life, IGM Financial, and other investments, adjusted for corporate overhead. We apply a 10% discount to the underlying net asset value due to the corporate structure and lack of control for shareholders.

Power Corporation of Canada is a holding company that derives the most of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. We estimate that Power Corp.'s stake in two publicly listed companies accounts for approximately 80% of its overall value. The company has stated that rather than diversifying across industries, Power Corp. will focus on the financial services sector. The company simplified its ownership structure and reduced corporate costs after it acquired all the shares of Power Financial in a restructuring effort in 2020.

The fourth-quarter results of no-moat Power Corporation of Canada were marked by a decent performance from its publicly trading operating companies, but other stand-alone businesses struggled. The firm reported adjusted net earnings of CAD 394 million or CAD 0.59 per share in fourth-quarter 2022, compared with CAD 676 million or CAD 1.00 per share in the fourth quarter of the previous year. Adjusted earnings from the publicly listed operating companies (Great-West Lifeco, IGM Financial, and Groupe Bruxelles Lambert) were reported at CAD 741 million in the fourth quarter compared with CAD 702 million in the previous year. Overall, results of the holding company were hit by CAD 160 million of negative contributions from Power Sustainable and a CAD 109 million impairment charge on Lion due to a significant decline in its market value. The holding company increased its quarterly dividend to 52.50 cents per share, an increase of 6.1%, which is in line with the recently announced dividend increase by Great-West Lifeco. We are maintaining our CAD 40 fair value estimate for the firm after incorporating fourth-quarter results.

We are relaunching Power Corporation of Canada with a fair value of CAD 40 per share after taking a fresh look at it. Our fair value estimate implies that Power Corporation of Canada is around 17% undervalued at the current prices. We assign a no-moat rating, a stable moat trend, and a Standard capital allocation rating to the company.

Power Corporation of Canada is a holding company that derives the bulk of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. We estimate that Power Corp.'s stake in two publicly listed companies accounts for approximately 80% of its overall value. The company has stated that rather than diversifying across industries, Power Corp. will focus on the financial services sector. The company simplified its ownership structure and reduced corporate costs after it acquired all the shares of Power Financial in a restructuring effort in 2020.

Power Corp. of Canada is a holding company that derives the bulk of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. In December 2019, Power Corp. announced that it would acquire all the shares of Power Financial (which house its stakes in Great-West Life and IGM Financial). This was completed by February 2020 and, in our view, simplified Power’s ownership structure and reduced costs. Rather than diversifying across industries, Power Corp. will focus on financial services.

Amid volatile equity and fixed income markets, Power Corporation saw its earning decline. Power posted third-quarter adjusted earnings of CAD 0.63, down from CAD 1.10 in the year-ago period. The decline was broad-based across Power’s portfolio. We will maintain our no-moat rating on Power Corporation’s shares and expect to lower our fair value estimate by a single-digit percentage as we update our model to reflect a lower fair value estimate of IGM Financial and lower net asset values of the firm’s alternative investments and standalone businesses.

No-moat Power Corp. of Canada reported a second quarter that reflected markets moving south. Adjusted earnings per share came in at CAD 0.87, down from an elevated CAD 1.51 in the year-ago period. The adjusted earnings of Great-West Life, Power Corp.’s largest holding, were roughly flat as life insurers are benefiting from rising rates. However, weak equity markets weighed on IGM Financial, and the company saw fair value decreases for its alternative investments. We are reducing our fair value estimate for Power Corp. to CAD 44 per share from CAD 46 as we account for a lower fair value estimate for IGM Financial and a markdown on its other investments, partially offset by reducing our forecast for corporate expenses. We also are tweaking our Morningstar Uncertainty Rating to Medium from High to reflect the Medium rating on Power’s two largest holdings, Great-West and IGM Financial.

Power Corp. of Canada is a holding company that derives the bulk of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. In December 2019, Power Corp. announced that it would acquire all the shares of Power Financial (which house its stakes in Great-West Life and IGM Financial). This was completed by February 2020 and, in our view, simplified Power’s ownership structure and reduced costs. Rather than diversifying across industries, Power Corp. will focus on financial services.

Power Corporation of Canada is a holding company that derives the bulk of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. In December 2019, Power Corp. announced that it would acquire all the shares of Power Financial (which house its stakes in Great-West Life and IGM Financial). This was completed by February 2020 and in our view simplified Power’s ownership structure and reduced costs. Rather than diversifying across industries, Power Corp. will focus on financial services.

Power Corporation reported an OK start to 2022. Adjusted net earnings were CAD 617 million, down from CAD 924 million in the year-ago period. However, the bulk of the decline can be entirely attributable to lower adjusted earnings from alternative asset investment platforms as a result of losses and impairments at Power’s Sustainable China portfolio. Absent this, adjusted earnings would have grown. Overall, there was little in the earnings release that would alter our long-term view of the firm, and we will maintain our no-moat rating and fair value estimate of CAD 46.

For the fourth quarter of 2021, no-moat-rated Power Corporation reported adjusted earnings per share of CAD 1.00, up from 0.93 in the year-ago period but below the FactSet consensus estimate of CAD 1.08. We’d attribute the miss to softness at GBL. Great-West Life contributed CAD 0.82 to adjusted earnings and IGM contributed CAD 0.24, which is up from CAD 0.73 and CAD 0.19, respectively. We are modestly raising our fair value estimate to CAD 46 from CAD 44 to account for a slightly higher value of Power Corporation’s stake in Great-West Life as well as time value of money.

Power Corporation of Canada is a holding company that derives the bulk of its underlying value from its ownership stakes in no-moat Great-West Life and narrow-moat IGM Financial. In December 2019, Power Corp. announced that it would acquire all the shares of Power Financial (which house its stakes in Great-West Life and IGM Financial). This was completed by February 2020 and in our view simplified Power’s ownership structure and reduced costs. Rather than diversifying across industries, Power Corp. will focus on financial services.