Cineplex Inc. (TSX: CGX, OTC: CPXGF) delivered poor results for the fourth quarter, with adjusted earnings per share down 42% year over year.

However, the company’s performance can be somewhat volatile from quarter to quarter since it’s largely dependent on the popularity of film releases during each period. As such, it’s more instructive to compare full-year 2016 results against the prior year.

For the full year, revenue increased 8%, thanks in part to the acquisition of a controlling interest in arcade game distributor and operator CSI.

Box-office revenue was up 1%, food-service sales climbed 1.3%, and advertising jumped 11%. Operating expenses were well contained, though that was not enough to prevent a 6% decline in adjusted EBITDA (earnings before interest, taxation, depreciation, and amortization). 

Box-office revenue and concession revenue per patron both hit record highs during the year, as the company provided more premium theater experiences and offered higher-margin food choices.

However, attendance was down 12% compared to 2015, when “Star Wars: The Force Awakens” and several other highly popular movies drove attendance to record levels.  

The balance sheet remains solid, with a debt-to-capital ratio of 26%, while operating and free cash flow are abundant.

Cineplex is in the process of reducing its reliance on volatile box-office revenue by providing consumers with enhanced food services and more video gaming. The company is already achieving some success in these areas, with food revenue up 13% over the past two years, while gaming revenue surged 95% for the year.

Cineplex currently yields 3.3%, and the monthly dividend is 3.9% higher than a year ago. But the payout ratio is only 65% of free cash flow, which leaves further room for dividend growth.

At the same time, the company’s shares trade at full value when compared to similar North American operators. We estimate Cineplex’s fair value at C$50, or US$38.

CI Financial Corp. (TSX: CIX, OTC: CIFAF), the mid-size Canadian asset management company, produced reasonable results for the fourth quarter, with earnings per share up 6% from a year ago. The dividend was also 6% higher.

The company experienced its fourth consecutive net quarterly outflow of assets under management, as institutional investors made large redemptions. Profit margins were also squeezed as the trend toward lower management fees for actively managed accounts continued.

Despite the net outflow, assets under management still increased by 6%, to C$118 billion, courtesy of rising equity prices.

CI’s profitability is ultimately dependent on the performance of its funds and the overall market, which both affect its ability to attract new assets.

In terms of performance, CI has made significant gains, with the average ranking of its top-20 mutual funds now in the second quartile compared to peers over the past one to five years. This is a big improvement compared to a year ago.

The company’s balance sheet remains strong, and cash flow is abundant. Free cash flow is currently fully utilized to pay dividends and buy back shares.

Times are tough for mutual fund managers. Only those that can outperform both the market and low-cost ETFs will survive in the long run. CI Financial is a high-quality operation, but margin pressure will continue as the firm’s portfolio managers work to further improve their performance.

Meanwhile, the company’s valuation is in line with its peers. CI’s shares currently yield 5.2%, and we estimate the stock’s fair value at C$28, or US$21.

RioCan REIT (TSX: REI-U, OTC: RIOCF) reported fourth-quarter adjusted funds from operations per unit declined 8.5% year over year. The distribution per unit was unchanged.

Despite an improvement in Canadian operations, RioCan’s sale of its sizable U.S. portfolio last year left a gap in overall profits.

It will take time for management to reinvest the proceeds from this sale. But the real estate investment trust (REIT) has already made progress toward that end by acquiring interests in 17 additional Canadian income-producing properties for $595 million last year.

Operationally, RioCan had a good quarter, with same-property operating income up 2.2% along with an 8.1% lift from renewals.

Committed occupancy improved during the quarter to 95.6%, but it’s still lower than the 97% achieved before the departure of Target Canada in early 2015. Management reports that it has signed or received commitments from new tenants that will cover 120% of the lost Target rent base. However, the majority of new tenants won’t start to pay rent until after rent-free periods terminate over the next 12 months.

In addition to working toward reinvesting most of the US$1.0 billion in proceeds from the sale of the U.S. portfolio, RioCan has also used the money to reduce debt. The balance sheet is now in excellent shape, with a debt-to-asset ratio of 40%. 

RioCan currently has an attractive distribution yield of 5.5%, but we remain concerned about the lack of distribution growth. The payout ratio remains over 90%, and we believe it’s unlikely that RioCan’s board will push the ratio much higher. Growth in distributions will depend on growth in profits.

The REIT owns a high-quality portfolio concentrated in the core urban areas of Canada. The re-leasing of the Target space and development and intensification of existing properties will boost profits over the next few years. For now, we will continue to hold RioCan in the Dividend Champions Portfolio.

Earnings Season Checklist

We’re nearing the end of earnings season for the calendar fourth quarter. The table below lists the date for each company’s earnings release, as well as the expected dividend. Please note that some dates have yet to be confirmed and are, therefore, based on the timing of past reports. Rows that have been highlighted green indicate companies that have already reported results.