Opinions
Cole Kachur
DHX Media
DHX.B-T
DON'T BUY
Oct 25, 2017
Stock price when the opinion was issued
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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.
This may be a sign of the times, where they essentially own cable subscription type services. A niche segment in the TV industry. There has been lower viewership and lower advertising dollars, which hurts revenues. Not sure the slide in the stock is done yet and would be a little leery. If you own, consider if there are better opportunities for your money to work.