The four TSX-listed Canadian stocks we’ve discovered have low P/E ratios, which can indicate good value for investors
SmallCapPower | February 28, 2019: Today we have filtered out TSX-listed Canadian stocks with market caps under $4 billion and identified four stocks trading below the average P/E multiple of the group. The average P/E multiple of our sample size of 338 TSX-listed stocks with market caps under $4 billion is 21.5x. For reference, the price-to-earnings ratio (P/E) is a commonly used relative valuation multiple by investors to identify undervalued companies. It is calculated by dividing the companies current share price by their EPS. In layman terms, it shows how much money you are willing to pay for one dollar of earnings. If a company’s P/E ratio is 10x, then you are paying $10 for $1 of earnings, implying an earnings yield of 10%.
*Share prices as at close February 26, 2019, data obtained from S&P Capital IQ
Sleep Country Canada Holdings Inc. (TSX:ZZZ) – $22.10
Home Furnishing Retail
Sleep Country Canada is a specialty retail store that engages in the retailing of mattress and bedding-related products. The Company offers a wide variety of mattresses, pillows, duvets, sheets, frames, headboards, and other sleep accessories. On November 29, 2018, Sleep Country announced its acquisition of Endy Sleep for $88.7M. On February 26, the Company released its Q4/19 and FY2018 financial results, reporting a 6.1% increase in revenue to $623.0 million since Q4/17.
- Market Cap: $734.5 Million
- Forward P/E NTM: 11.7x
- 7-Day Total Return: +2.6%
- 90-Day Total Return: +5.1%
Cineplex Inc. (TSX:CGX) – $25.40
Entertainment
Cineplex is a Canada-based film exhibition company that owns and operates movie theatres across all 10 provinces. Operating through three segments: film entertainment & content, media & amusement, and leisure, the Company’s subsidiaries include Famous Players LP, Galaxy Entertainment Inc., Cineplex Digital Media Inc., Cineplex Digital Networks Inc., and Cineplex Starburst Inc. The Company also operates WorldGaming.com, a competitive eSports platform, and bars/restaurants such as The Rec Room in Toronto. On February 15, the Company released its annual financial statements, reporting a 5.6% decrease in net income from the same period last year.
- Market Cap: $1.6 Billion
- Forward P/E NTM: 19.5x
- 7-Day Total Return: +0.4%
- 90-Day Total Return: -3.5%
Freshii Inc. (TSX:FRII) – $2.55
Restaurants
Freshii is a healthy fast food restaurant chain popular among Millennials. The Company added 18 stores in Q4 FY2018 for a total store count of 431 locations. The Company has operations in 16 countries, including Canada, U.S., Ireland, Sweden, Netherlands, UAE, and Saudi Arabia. Freshii’s restaurants range in size from 300 to 2,500 sq. ft, with an average of 1,200 sq. ft. Freshii offers a menu tailored to the cultural tastes and trends of each individual region within which it operates, with a focus on healthy, fresh food at an affordable price. On February 21, the Company announced its Q4/18 and FY18 results, reporting a sales increase of 9% and 25%, respectively.
- Market Cap: $66.5 Million
- Forward P/E NTM: 19.5x
- 7-Day Total Return: -21.8%
- 90-Day Total Return: -5.9%
Pizza Pizza Royalty Corp. (TSX:PZA) – $10.43
Restaurants
Pizza Pizza Royalty owns and franchises quick-service restaurants under the Pizza Pizza and Pizza 73 brands in Canada. The Company has 785 restaurants, as of January 1, 2018, in the royalty pool. The Company reported revenue of $8.945 million in Q3/18, a 5.4% increase from Q2/18.
- Market Cap: $255.3 Million
- Forward P/E NTM: 11.7x
- 7-Day Total Return: -0.8%
- 90-Day Total Return: +13.7%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
To read our full disclosure, please click on the button below:
