Opinions
Robert McWhirter
DHX Media
DHX.B-T
COMMENT
Jul 21, 2016
Stock price when the opinion was issued
You might be interested:
Produces and licenses children's content such as TV shows. Also licenses the properties to toymakers on different types of products. Got into a bit of a quandary where they were ramping up debt load and the earnings growth slowed down. The market punished the stock. Valuation is now getting to a level where it is a bit easier to digest. There are also activists entering the stock. The recent move by Disney, where they purchased some assets from Fox and were making a big statemen of the importance of owning content, is important. There may be potential buyers sniffing around a company like this, for the content. Still a higher risk, but he would be okay with a half position.
The CEO just stepped down. They were growing fast and adding debt to find it but then the growth fell off and they were left with the debt, so they started a strategic review and the CEO stepped down. This is not a great development. You should look elsewhere. He thinks they will have to sell the company now.
Expected to earn $.35 in June/2016, growing to $.40 in 2017, about a 15% lift. Dividend is probably as big as you are going to see in the near term. They grow by acquisition, and it should continue to do well. Has a library of children’s videos, which they can continue to build out at almost no cost. They hope to get big enough that someone like Disney (DIS-N) will buy out their videos. There is also the potential of someone like Netflix (NFLX-Q) taking a run at them. Stock seems to be relatively expensive.