Power Corporation of Canada (POW) reported higher profits in the third quarter from a year ago, thanks to significant gains at IGM Financial (IGM).
Based in Montreal, Power Corp is a diversified holding company focused on financial services in North America, Europe and Asia. (See Analysts’ Top Stocks on TipRanks)
Power holds full control of Power Financial and thereby controlling interests in Great-West Lifeco (GWO), IGM Financial, Wealthsimple, and Groupe Bruxelles Lambert.
Earnings
Profit came in at C$741 million (C$1.09 per share) in Q3 2021 compared with C$505 million or (C$0.75 per share) in Q3 2020. Great-West Lifeco net earnings increased 5.6%% to C$872 million, from C$826 million a year earlier. IGM Financial net earnings increased 42% to C$270.8 million, from $190.9 million in the third quarter of 2020.
On an adjusted basis, earnings for the quarter ended September 30 increased to C$748 million (C$1.10 per share) from C$483 million (C$0.72 per share), in the third quarter of 2020.
In the quarter, Power Corporation completed the sale of its 37.1% stake in the Sagard Europe 3 Fund as part of a secondary transaction. The company received proceeds of C$334 million (€225 million) and realized a gain of C$66 million in net earnings.
Power Corporation intends to resume normal course share buybacks under its normal course issuer bid.
Wall Street’s Take
On November 9, BMO Capital analyst Tom Mackinnon reiterated a Hold rating on POW while raising its price target to C$44 (from C$43). This implies 3% upside potential.
Overall, POW scores a Hold consensus rating among analysts based on one Buy and three Holds. The average Power Corp of Canada price target of C$46 implies upside potential of 7.7% to current levels.
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