Markets

Analyst Actions: Credit Suisse Transcontinental Inc Q113 Results Preview; Raising Estimates

Event: "TCL/a reports Q1.13 on March 13th, with a conference call scheduled for 2:00 PM EST. We currently forecast EBITDA of $77 million (+12% y/y), slightly below consensus of $81 million. We have refreshed our model as we roll it forward and our '13/'14EPS rises to C$1.76/C$1.68 from C$1.57/C$1.53 almost entirely due to lower depreciation, with no changes to EBITDA. In addition we are also raising our FY15 EPS estimate to C$1.68 (from C$1.64)."

View: "In the near-term we believe TCL/a should be supported by a potential dividend in the upcoming quarter and the ramp up of Quad synergies. Our underperform view reflects our longer-term concerns with respect to organic revenue trends, which has remained weak despite significant capital investments over the past five years. Secular pressures in print media, along with excess N.A. printing capacity utilization, suggest growth will remain challenged. While TCL generates strong FCF, we believe it will increasingly be used for investments to diversify TCL's business."

Quarter shouldn't be too bad: "1) We expect TCL/a to announce a 5-10% dividend increase with results. The dividend as a ratio of FCF is currently ~25%; 2) In Q1.13 Printing revenues will benefit from one more quarter of the Canadian Tire contract as well as the ramp-up of Quad/Graphics synergies, offset by the wind down of the Zeller's contract and price concessions. We forecast 16% y/y revenue growth driven by acquisitions and flat organic growth; 3) Print margins are expected to decline modestly due to the continued dilutive impact from the Quad/Graphics deal as synergies gradually flow-through; 4) We also expect 0% y/y organic revenue growth in Media with recent acquisitions driving 8% y/y growth overall."

Valuation: "TCL trades at 4.5x fwd EBITDA slightly above peers at 4.1x."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Commodities

Latest Markets Videos

MTNewswires

Founded in 1999, MT Newswires (formerly known as Midnight Trader) is a leading provider of original source, multi-asset class, real-time, global financial news and information to most of the largest banks, brokerage firms and professional market data, trading & research applications in North America.

Learn More