Canaccord Genuity Group Inc

Canaccord Genuity Group Inc (TSX: CF) is a financial services company based out of Canada. The Group’s business is divided into two reportable segments being capital markets and wealth management.

Recent News

On 11^th June 2020, Canaccord Genuity Group announced the expansion of its International Investment Banking capabilities to Latin America and Caribbean regions and appointed Gene McBurney as Investment Banking head.

Financial Highlights – Q4 and FY2020 (31^st March 2020, CAD, thousand)

(Source: Quarterly Report, Company Website) 

For the financial year ending 31^st March 2020, the revenue increased by 2.8 per cent to CAD 1,223,867 thousand as against CAD 1,190,567 thousand in FY2019. The revenue increased by 12.2 per cent to CAD 319,648 thousand in Q4 FY2020 versus CAD 284,808 thousand in Q4 FY2019. The Group’s adjusted net income before taxes stood at CAD 123,057 thousand in the financial year 2020 versus CAD 135,586 thousand in the financial year 2019, reflecting a decline of 9.2 per cent. The adjusted net income before taxes for Q4 FY2020 increased by 12.3 per cent to CAD 24,945 thousand from CAD 22,221 thousand in the Q4 of the financial year 2019. The adjusted net income attributable to shareholders declined by 0.4 per cent to CAD 96,491 thousand in FY2020 from CAD 96,899 thousand in the FY2019. The adjusted net income attributable to shareholders increased by 32.3 per cent to CAD 19,142 thousand in Q4 of the financial year 2020 from CAD 14,466 thousand in Q4 FY2019. The adjusted basic earnings per share stood at $0.98 in FY2020 versus $1.01 in FY2019, reflecting a decline of 3 per cent.

Share Price Performance

Daily Chart as of 26th June 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Canaccord Genuity Group Inc shares closed at CAD 6.45 at the time of writing after the market close on 26th June 2020. Stock's 52 weeks High is CAD 6.68 and Low is CAD 3.21.

Key Risks

The market conditions in which the company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the company. Liquidity and interest rate risks could affect the operations of the company.

Conclusion

The Company has shown a decline in the financial performance in the financial year 2020. The top-line performance has improved while the bottom-line performance has declined, with a decline in profitability for the period. The Group’s wealth management business has shown robust performance from its global operations in Q4 FY2020. The client’s assets from the North American business has declined by 12.1 per cent for the period. The Group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and return with capital discipline and reducing its costs to preserve cash.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of CAD 6.45 (as on 26th June 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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