DHX Media Ltd.

On my other blog I am today writing about some of the companies I looked at more closely in my recent monthly update, Part 1 learn more...

Sound bite for Twitter and StockTwits is: Interesting small div company. This company now has rising Revenue, Earnings and Cash Flow. It is trying to be a dividend growth stock, I presume. However the dividend yield is very low and I do not invest in companies with dividends below 1%. See my spreadsheet on DHX Media Ltd.

I do not own this stock of DHX Media Ltd. (TSX-DHX.B, 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.

This company started to pay a dividend in 2013. It is a good sign when a company does this. It shows that they have confidence in the future. However, the dividends are very modest and they struggled at first to cover the dividends. The current dividend yield is just 0.71% based on a stock price $7.93 and dividends of $0.06. The 3 year median dividend yield is 0.98%.

When dividends started, the company paid out slightly more in dividends than it made in earnings. In 2014, the Dividend Payout Ratio was 34% and it is expect to be around 13%.

Outstanding shares have grown a lot. The shares have grown by 15% and 24% per year over the past 5 and 10 years. Shares have increased due to Share Issues, Stock Options and ESPP. Shares have decreased due to Buy Backs. With such high growth in outstanding shares, the per share growth values are the ones that matter. Revenue, Earnings and Cash Flow have all grown well over the last couple of years.

Revenue is up by 45.5% and 28.9% per year over the past 5 and 10 years. However Revenue per share grown is 26.6% and 3.7% per year over the same periods. Analysts expect growth in Revenue this year at 15%. However, if you compare the 12 month period to the end of June 2015 and to the end of the first quarterly period of 2016, Revenue has grown at 40.5%. For this company, the annual statements are dated at June 30 each year.

To begin the company had years of earnings losses. This stopped in 2011. Since then EPS has grown at 52% per year. Analysts expect EPS to grow at 162% for 2016. If you compare the 12 month period to the end of June 2015 and to the end of the first quarterly period of 2016, EPS has grown at 75%.

Although there is good growth in Cash Flow over the past couple of years, the 5 and 10 years growth is disappointing. CFPS flat over the past 5 years and up by 5.3% per year over the past 10 years. Analysts expect good growth in Cash Flow this year at around 72.6%. If you compare the 12 month period to the end of June 2015 and to the end of the first quarterly period of 2016, Cash Flow has grown at 39.7%.

The Return on Equity has been low and the one for 2014 is just 7.5% and its 5 year median is just 3.5%. The ROE on comprehensive income is often lower. The ROE here is 4.7% for 2014 and its 5 year median is 4.2%.

The debt ratios are mostly good except for Leverage Debt/Equity Ratios which are currently quite high. The Liquidity Ratio for 2014 was 1.83 and it has a median of 1.84. The Debt Ratio for 2014 was 1.48 and it 5 year median is 2.11. The Debt Ratio has been travelling lower lately. The Leverage Debt/Equity Ratios for 2014 was 3.09 and 2.09 respectively.

The 5 year low median and high median Price/Earnings per Share Ratios 38.71, 52.28 and 65.56. The 10 year corresponding ratios are a bit lower at 32.19, 43.17 and 53.61. These are all quite high ratios. The current P/E Ratio is 18.88. Relatively speaking, this is a good one for this company. The current P/E Ratio is based on a stock price of $7.93 and 2016 EPS estimate of $0.42. Shareholders have done well in total return over the past 5 and 10 years but the stock price is down some 15% so far this year.

I get a Graham Price of $4.50. The 10 year low, median and high median Price/Graham Price Ratios are 1.27, 1.95 and 2.77. These are rather high ratios. The current P/GP Ratio is 1.76. This current ratio suggests a stock price that is relatively reasonable.

I get a 10 year median Price/Book Value per Share Ratio of 1.19. This is a rather low P/B Ratio. The current P/B Ratio is 3.71 a value some 212% higher. This stock price testing suggests that the stock price is relatively expensive. However, on an absolute basis a value of 3.71 is rather high. Generally, a good P/B Ratio is considered to be around 1.50.

I get a 10 years P/S Ratio of 1.77. The current P/S Ratio of 3.23 is some 82% higher. The P/S Ratio is the revenue ratio. This stock price testing suggests that the stock price is relatively expensive. The P/S Ratio has moved up quite a bit over the past few years when the stock price started to move rapidly up in 2012.

The total return to date over the past 5 and 10 years is at 51.91% and 13.77% per year. The portion of this total return attributable to capital gain is 50.71% and 13.48% per year. . The portion of this total return attributable to dividends is 1.20% and 0.30% per year.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus recommendation is a hold. The 12 month stock price consensus is $10.17. This implies a total return of 28.95% with 28.25% from capital gains and 0.71% from dividends.

You can see what some analysts think of this stock on Stock Chase. This article in the Chronicle Herald talks about DHX Studios teaming up with DreamWorks Animation of California to produce content for DHX Television. This article in the Chronicle Herald talks about DHX having a good first quarter of 2016.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

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 Ltd.

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.

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