It’s been one of the better performers in the market since 2013, but Euro Pacific Canada analyst Rob Goff thinks DHX Media (DHX Media Stock Quote, Chart, News: TSX:DHX) still has a lot of upside.
Yesterday, DHX Media reported its Q2, 2016 results. The company earned $11.67-million on revenue of Revenues: up 27 per cent to $81.5-million, from $64.3-million for the second quarter of 2015.
“We are very pleased to be reporting our seventh consecutive quarter of growth in revenues and adjusted EBITDA, on a quarter-over-quarter basis, driven by solid fundamentals and steadfast execution of our business strategies,” said CEO Dana Landry. “We continue to see excellent demand for our content, allowing us to capitalize on opportunities in both traditional linear media and the new digital environment created by the global proliferation of video-on-demand services. We anticipate future growth as we further leverage our capabilities for key brands across our integrated platform of production, distribution, broadcast and licensing. Developments such as our recent expansion of activities in China, and new content partnerships will also serve to help deliver this growth. Management is further pleased to announce an increase in our dividend to 1.6 cents, the sixth increase since the dividend was instituted in March, 2013.”
Goff says he continues to see solid prospects for both organic growth and growth through M&A at DHX.
“We continue to believe DHX Media’s organic growth potential is discounted in the market. We estimate organic growth at 25.2% for FQ216 and 32.9% for the YTD following 26% for F2015. We believe the consensus, and in turn, imbedded expectations significantly discount the growth prospects from the Merchandising and Licensing Division (M&L) along with its international growth potential. We see both emerging in C2017+. Organic prospects are solid and at some time the attractive acquisition pipeline is likely to yield accretive acquisitions. We further believe guidance is conservative – a view supported by management’s comment on the call that the mid-point guidance leaves upside.”
In a research update to clients today, Goff maintained his “Buy” rating and one-year target price of $13.00 on DHX Media, implying a return of 84 per cent at the time of publication.
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