Monday, December 11, 2017

DHX Media Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Media Co. The stock price is probably reasonable. This stock seems to be priced as a tech stock, but it is not a tech stock. There is a concern about their debt load. Considering the history of price on this stock, this might be a time when you can get it rather cheap. See my spreadsheet on DHX Media Ltd.

I do not own this stock of DHX Media Ltd (TSX-DHX.B, OTC-DHXMF). In the CanTech Letter of May 2014 Byron Capital says investors should accumulate DHX Media aggressively.

What I noticed is the high level of debt and Goodwill and Intangibles against the current market cap. Of course the market cap has been falling because investors are worried about the high debt level. For long term debt the Debt/Market Cap Ratio is 0.97 for the 2017 financial year and is currently at 1.34. The Goodwill and Intangibles/Market Cap Ratio is 1.03 for the 2017 financial year and is currently at 1.44. These ratios being close or above 1.00 are a very bad sign.

The Liquidity Ratio is low for the June 2017 financial year. This ratio has had its ups and downs. The 5 year median is 1.84. Any ratio of 1.50 and above is good. The Debt Ratio for the June 2017 financial year is also low at just 1.31. Here again the 5 year median is good at 1.60.

The high debt loads are showing up in the Leverage and Debt/Equity Ratios. These ratios for the 2017 financial year are 4.24 and 3.24. The current ratios are a bit better at 3.49 and 2.49.

The 5 year low, median and high median Price/Earnings per Share Ratios are 38.71, 35.36 and 62.56. The 10 year ratios are 26.52, 35.27 and 44.02. This stock was just issued some 12 years ago and the 12 year ratios are the same as the 10 year ratios. The current P/E Ratio is 22.33 based on a stock price of $4.02 and 2018 EPS estimates of 0.18. This stock price testing suggests that the stock is relatively cheap.

The P/E Ratios on stock are very high considering the type of stock it is. Even the current P/E of 22.33 is rather high than reasonable for this stock. The $0.18 EPS is rather optimistic, but I must admit that in the first quarter of this financial year the EPS was $0.06. Last year they had an earnings loss of $0.03. For the prior year the EPS was $0.22. However, the median EPS for this stock over the past 12 years is just $0.02. Earnings have not only been low, but have been quite volatile.

I get a Graham Price of $3.57. The 10 year low, median and high median Price/Graham Price Ratios are 1.37, 2.08 and 2.74. The current P/GP Ratio is 1.13 based on a stock price of $4.02. This stock price testing suggests that the stock price is relatively cheap.

The P/GP Ratios are also quite high for this stock. However, where a P/GP Ratio of 1.00 or less on an absolute basis suggests that a stock is cheap, a P/GP Ratio of 1.13 is a reasonable ratio.

The 10 year median Price/Book Value per Share Ratio is 1.26. The current P/B Ratio at 1.28 is only 1.4% higher. The current P/B Ratio is based on Book Value of $422.3M, BVPS of $1.35 and a stock price of $4.02. This stock price testing suggests that the stock price is reasonable and around the median.

The P/B Ratios has often been low to reasonable (but not always) on this stock. A good P/B Ratio is considered to be at 1.50 or below. The current P/B Ratio of 1.28 on an absolute basis says that the stock price is relatively cheap. This is an important ratio in judging a stock.

The current dividend yield is 1.99%. The historical median dividend yield is 0.98% a value some 103% lower. The current dividend yield is based on dividends of $0.08 and a stock price of $4.02. This stock price testing suggests that the stock price is relatively cheap.

The company can afford their dividends. They had an earnings loss for the June 2017 financial year, so we cannot cover the 2017 dividends, but the 5 year coverage is 58.6%. This is good 5 year coverage and is an important value. It is nice when the dividends can be covered in the year paid, but it is essential that they are covered by dividends over time.

The DPR for Cash Flow per Share is good. The DPR for CFPS is 26% for the June 2017 year and the 5 year coverage is 20%. For CFPF coverage, you want the ratio to be 40% or less.

I get a 10 year median Price/Sales (Revenue) Ratio of 1.94. The current P/S Ratio is 1.15 a value 41% less. The current P/S Ratio is based on 2018 Revenue estimate of $470, Revenue per Share of $3.51 and a stock price of $4.02. This stock price testing suggests that the stock price is relatively cheap.

Revenue is expected to increase because a purchase that includes an 80% controlling interest in peanuts. See the Press Release by DHX Media on this purchase.

When I look at analysts' recommendations, I find Strong Buy (1), Buy (2) and Hold (8). The consensus would be a Hold. The 12 months stock price is $5.52. This implies a Total Return of 39.30% with 1.99% from dividends and 37.31% from capital gains.

Joyce Ramirez on The Ledger Gazette talks about this company raising their dividends for 2018. Jesse Mackey on Stock News Times talk about some positive rating changes for this stock. Note Outperform is a Buy and Section Perform is a Hold rating. See what analysts are saying about this company on Stock Chase. They are generally worried about the high debt level.

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.

The last stock I wrote about was about was Northland Power Inc. (TSX-NPI, OTC-NPIFF)... learn more. The next stock I will write about will be First Capital Realty (TSX-FCR, OTC-FCRGF)... learn more on Wednesday, December13, 2017 around 5 pm. Tomorrow on my other blog I will write about Dividend Growth 2017.... learn more on Tuesday, December 12, 2017 around 5 pm.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.


  1. Nice review. Are you planning to buy?

    1. not at the present time. I have some 50 stocks, so I am no looking to add another one at this time.