Please ensure Javascript is enabled for purposes of website accessibility

Why DHX Media's Shares Fell as Much as 19% Today

By Anders Bylund – Updated Apr 22, 2019 at 11:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Canadian maker of family-friendly video content didn't impress investors in this morning's second-quarter report.

What happened

Shares of DHX Media (WLDB.F -0.73%) fell as much as 19% lower on Tuesday following the release of disappointing second-quarter results. By 2:50 p.m. EST, the producer of children's shows and movies had recovered somewhat to a 14.8% drop.

So what

DHX Media's second-quarter sales fell 4.1% year over year to $117 million, measured in Canadian dollars. On the bottom line, the company swung to a net loss of $0.13 per diluted share, again in Canadian currency. There was no Wall Street consensus for this small-cap's earnings, but your average analyst had been looking for revenues closer to CA$122 million.

A collage of DHX Media's most popular titles, ranging from Teletubbies and Peanuts to Megaman and Mario.

Image source: DHX Media.

Now what

The big bottom-line swing followed mostly from currency-exchange effects, as the company posted a $15.5 million noncash unrealized loss on the valuation of properties held abroad. The falling revenue line was a byproduct of a shifting distribution strategy, in which more of DHX Media's content is earmarked for online media channels and less of it goes into traditional TV markets. The digital revenue streams have not yet managed to eclipse the old-school TV contracts in terms of quarter-by-quarter sales growth.

All told, I don't see anything terribly wrong with DHX Media's report that some time and patience won't fix. Today's knee-jerk market reaction looks like overkill, and the stock is starting to look undervalued after falling 48% lower over the last 52 weeks.

Check out the latest earnings call transcripts for companies we cover.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends DHX Media. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WildBrain Ltd. Stock Quote
WildBrain Ltd.
$1.71 (-0.73%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.