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  5. TSU: Why does this company continue to struggle to maintain momentum? [Trisura Group Ltd.]
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Q: Why does this company continue to struggle to maintain momentum? Today the Fed said no rate increases and potentially none for next year with the potential to reduce rates. Most stocks did well after this announcement, yet Trisura goes the opposite direction. How much more patience should we investors give Trisura?
Asked by Christopher on December 14, 2023
5i Research Answer:

Over the past three years, TSU has a total return of 54% (15.5% CAGR), whereas the TSX has a total return of 30% (9% CAGR). TSU has underperformed on a one-year basis, but on all other timeframes, it has shown outperformance.

The company has faced some issues recently with its writedowns, however, the fundamentals of the company are still strong, and its price has found a floor ~$30 over the past couple of years. If fundamentals deteriorate and its price breaks below $30, then we can reconsider the outlook of the business, it is trading in a range until certain underlying issues are resolved. It may lag the broader markets in the near term, but it is trading at a relatively cheap valuation and forward sales and earnings estimates are expected to be strong. It has a cash balance of $533M and a free cash flow yield of 13.5%. For now, we are comfortable with holding the name and reassessing upon future earnings results.