Quebecor World Earnings Preview: RBC Sees Falling Revenue

Weakness in Europe and to a lesser degree, North America, will lead to a decline in revenue for publisher Quebecor World Inc. (IQW) when the company reports first quarter results on Wednesday.

This forecast, from RBC Capital Markets analyst Drew McReynolds, has revenue falling 0.9% from a year earlier to US$1.454-billion, which translates to a 2.5% decline in earnings before interest, taxes, depreciation and amortization to US$125-million. The consensus estimate is US$130-million.

However, given Quebecor's accelerated restructuring, he would not be surprised by significant deviation from quarterly estimates.

He has an "underperform" rating on Quebecor World shares and US$13 price target.

While Mr. McReynolds thinks the worst is behind the company and improvement in the industry's fundamentals should help things, the slowing of the U.S. economy and "a share price that already looks to be factoring in a turnaround scenario" are some of the reasons behind his caution.

IQW 1-yr chart: