Monday, June 2, 2014

DHX Media Ltd.

On my other blog I am today writing about possible cheap dividend stocks for June 2014 continue... On this blog I am today writing about Husky Energy Inc. (TSX-HSE, OTC-HUSKF) continue...

I do not own this stock of DHX Media Ltd. (TSX-DHX, OTC-DHXMF). I took a look at the stock after reading a favorable report at CANTECH. There was also a favorable report from Global Maxfin Capital..

I looked at the basic stock and it is a small cap with a dividend. Although the dividend yield is low at 0.86%, it does have a dividend. I wanted to use the cash I had in my TFSA to buy some small cap stock with a dividend, so this stock did intrigue me.

First I do not know why they started to pay a dividend. They clearly cannot afford to do so. They are paying out in 2013 a lot more than they are earning. I realized that in 2012 they had a lot of surplus cash. However, at the end of 2013 their surplus cash has all but disappeared. At the end of the third quarter they again had a lot of surplus cash, but it was from selling more shares. The number of shares has increased by 88% from the end of June 2013 to the end of the third quarter.

The revenues have been rising, but they cannot consistently earn profit nor cash flow from this rising of revenues. However, if you look at revenue per share, this value has been going down. The decline in revenue per share over the past 5 years is 5%. If you look at 5 year running average, the decline is 0.6%. So basically revenue per share has gone nowhere.

So at worse the company cannot grow revenue per share or EPS or CFPS and at best they are inconsistent. If you look at the 12 month period to the end of the third quarter compared to the 12 month period to the end of June 2012, the Revenue, EPS are going the right direction. The problem with Revenue is that the Revenue per Share using the estimates has gone down because of the increase in shares. Cash Flow has not improved.

The stock may take as stocks take off for all sorts of reasons. Not all the reasons for stocks taking off are a good sign. Some just take off because people believe they will. But this will not last without some proper supporting financials.

I do not see this as a stock for the long term as a good long term investment must have something to support it like increasing Revenue per Share, EPS CFPS. I do not believe that this stock is a long term investment, so it is a stock I will not buy. See my spreadsheet at dhx.htm.

DHX Media is a leader in the creation, production and marketing of family entertainment. DHX Media owns, markets and distributes over 10,000 episodes of entertainment programming worldwide and licenses its owned properties through its dedicated consumer products business. Its web site is here DHX Media.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

No comments:

Post a Comment