The Canadian stocks we’ve identified are trading at a forward price to earnings (P/E) discount relative to their peer group
SmallCapPower | May 10, 2019: The forward price to earnings (P/E) ratio is calculated by dividing the current share price by the sum of consensus analyst estimates for the next four quarters. The forward P/E ratio is commonly looked at because markets trade on future expectations, not past results, and the forward multiple depicts the optimism of the market towards a company’s prospective growth. A higher forward P/E ratio than the average indicates an expectation the company is likely to experience a significant amount of growth. However, a lower forward P/E ratio could indicate that the stock is undervalued and trading at a discount. Today we have uncovered four Canadian stocks that are trading at a forward P/E lower than the median of our sample set. For reference, we pulled a sample of 463 Canada-listed companies with market caps under $5.0B, the median and mean of their forward P/E ratios are 15.1x and 23.2x, respectively.
*Share prices as at close Wednesday, May 8, 2019, data obtained from S&P Capital IQ
Canaccord Genuity Group Inc (TSX:CF) – $5.45
Investment Banking and Brokerage
Canaccord Genuity is an independent and full-service financial services company. Canaccord provides investment solutions, and brokerage and investment banking services to individual, institutional, corporate, and government clients. CF has two operating segments. The first segment, Canaccord Genuity, offers banking, advisory, equity research, and sales & trading services. Canaccord Genuity Wealth Management, the second segment, provides brokerage services and investment advice to retail or institutional clients in Canada, the U.S., the UK, and Europe.
- Market Cap: $540.8 Million
- YTD Return: -5.2%
- Forward P/E Ratio: 7.0x
- 90-Day Average Volume: 146,000
Pizza Pizza Royalty Corp (TSX:PZA) – $10.43
Restaurants
Pizza Pizza Royalty, through its subsidiary Pizza Pizza Royalty Limited Partnership, owns and franchises quick-service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. It operates through receipt of royalty income from the ownership of the Pizza Pizza and Pizza 73 Rights and Marks segment. The Company has 772 restaurants in the royalty pool as of January 1, 2019. Pizza Pizza Restaurants operate in Ontario, Quebec, Saskatchewan, Manitoba, and Nova Scotia.
- Market Cap: $330.3 Million
- YTD Return: 17.4%
- Forward P/E Ratio: 11.6x
- 90-Day Average Volume: 73,000
WestJet Airlines Ltd. (TSX:WJA) – $18.52
Airlines
WestJet provides scheduled airline services and travel packages. The Company offers schedules flights and cargo & charter services. The Company also operates WestJet Vacations, WestJet Encore, and Swoop. WestJet vacations provides air, hotel, car, and excursion packages. WestJet Encore is a regional airline with a fleet of turboprop aircraft in a network of destinations in Canada and the United States. Launched on June 20, 2018, Swoop is an ultra-low-cost carrier for air transportation. As of December 31, 2018, WJA operates a fleet of 115 Boeing 737 Next Generation, 11 Boeing MAX 737, 47 Bombardier Q400, and 4 Boeing 767-300 ERW.
- Market Cap: $2.1 Billion
- YTD Return: 4.6%
- Forward P/E Ratio: 12.3x
- 90-Day Average Volume: 392,000
Rogers Sugar Inc. (TSX:RSI) – $5.85
Packaged Foods and Meats
Rogers Sugar engages in refining, packaging, and marketing sugar & maple products. The Company offers granulated, plantation raw, brown, organic, icing, maple, stevia, smart sweetener blend, and coconut sugar. RSI also offers syrups, jam & jelly mixes, iced tea mixes, and hot chocolate mixes. Roger Sugar markets its products to wholesalers, restaurants, and end users, under the Lantic name in Canada, the U.S, and globally.
- Market Cap: $614.3 Million
- YTD Return: 7.8%
- Forward P/E Ratio: 13.2x
- 90-Day Average Volume: 101,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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