One-glance verdict
Undervalued
$12.01 our estimate vs market $0.80
93% below our estimate, below the bear case
Fundamentals snapshot
WildBrain Ltd.
WLDBF · OID · Communication Services · Entertainment
Current price
$0.80
52-week range
$0.65 - $1.63
Market cap
$169.84M
Balance sheet
Healthy
1.50x Concerning
Net cash $19.53M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 13.3% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Return on equity was -35.1% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 14.9% to -5.2% over 3 years.
What this company does
WildBrain Ltd.
WildBrain is an entertainment company that creates and owns children's shows and characters, like Teletubbies and Strawberry Shortcake. The company makes most of its money by producing content for services like YouTube and Netflix, and through licensing (getting paid by other companies to put its characters on products like toys and clothes). This matters because owning a large library of well-known characters can provide a steady source of income from both new shows and old classics that appeal to different generations.
How the company got here
WildBrain started in 2006 as DHX Media, created from the merger of two Canadian companies, Decode Entertainment and Halifax Film Company. Over the years, it grew by acquiring other companies and their libraries of children's shows, making it one of the largest independent owners of kids' television programming in the world. A key turning point was the creation of a YouTube network called WildBrain in 2016, which became so successful that the entire company was renamed WildBrain Ltd. in 2019. Recently, the company has been simplifying its business by selling its television channels and its stake in the Peanuts brand (home to Charlie Brown and Snoopy) to focus more on its core operations.
What it actually does
WildBrain is an entertainment company that focuses on creating and sharing stories for kids and families. You might recognize some of the famous characters it owns, like Strawberry Shortcake, Teletubbies, Yo Gabba Gabba!, and Inspector Gadget. The company creates new shows and movies, distributes its large collection of classic shows to streaming services and TV channels, and manages the brands of its characters. This means they also handle things like toys, games, and clothing that feature their characters, earning money when those products are sold.
Franchise & Global Licensing
This part of the business is all about managing and making money from WildBrain's famous character brands, which they call franchises. When you see a Teletubbies toy or a Strawberry Shortcake T-shirt in a store, this division has likely made a deal with the toy or clothing company. For that right, the other company pays WildBrain a fee, often a percentage of sales, which is called a royalty. This segment also includes their licensing agency, WildBrain CPLG, which not only represents WildBrain's own characters but also acts as a matchmaker for other brands, helping them find partners for products and earning a commission (a fee for their service) for doing so. This is a major and growing part of the company's business.
Content
The Content division is the creative heart of the company, responsible for making the actual shows and movies. This includes everything from developing new ideas to producing animated and live-action series at its own studios. They create new shows based on their own characters, like a new "Strawberry Shortcake" series, for streaming services like Netflix and Apple TV+. This segment also earns money by licensing (renting out) shows from its huge library to different TV channels and streaming platforms around the world.
WildBrain Network
This segment is focused on digital distribution, which means getting its shows in front of audiences online. A huge part of this is their network of over 1,000 channels on platforms like YouTube, where they share clips and full episodes of their shows. The company makes money here primarily from advertising; brands pay to have their ads shown before or during the videos. This network reaches a massive global audience, with billions of views every month, making it a significant way for the company to connect with kids and families directly.
What management is betting on now
Management is focusing on a "franchise-led" strategy, which means they are concentrating on their most famous and beloved characters like Strawberry Shortcake and Teletubbies. The plan is to grow the value of these brands by creating new content, expanding their reach online through the WildBrain Network, and striking more consumer product deals. The company has recently simplified its operations by selling off its TV channels to double down on this 360-degree approach: using great content to build a fan base, reaching that audience online, and then offering products and experiences they'll love. They are also investing significantly in technology and marketing to support this growth for the future.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $12.01 vs current price $0.80
Our most-likely fair value is $12.01 a share — about 1,401.4% above today's price of $0.80, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $19.5M - more cash than debt. Interest coverage 1.5x.
Net debt
$-19.53M
Interest coverage
1.50x
WildBrain Ltd.'s profit covers its interest bill about 1.5 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
WLDBF
BASELINE
WildBrain Ltd.
Total debt $43.52M Interest coverage 1.50x This is the baseline the peer rows are being compared against.
Total debt $18.82M Interest coverage -17.92x -100% vs WLDBF This peer has almost no interest-payment cushion compared with WLDBF.
Total debt $46.62M Interest coverage 30.19x +1,909% vs WLDBF Carries about 20.1x more debt cushion than WLDBF.
Total debt $125.51M Interest coverage 82.93x +5,420% vs WLDBF Carries about 55.2x more debt cushion than WLDBF.
Total debt $261.36M Interest coverage -2.37x -100% vs WLDBF This peer has almost no interest-payment cushion compared with WLDBF.
Total debt $26.07M Interest coverage -31.09x -100% vs WLDBF This peer has almost no interest-payment cushion compared with WLDBF.
What you should know
The case for and against WLDBF
2 Rewards
3 Risks
Rewards
-
Revenue grew 13.3% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Return on equity was -35.1% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 14.9% to -5.2% over 3 years.
-
Insider ownership is only 2.2% (peer median: 5.6%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
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P/B
0.87x
P/S
0.69x
EV/EBITDA
-14.71x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
39.0%
Operating margin
-5.2%
Net margin
150.6%
ROE
-35.1%
ROA
-1.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.23x
Current ratio
1.84x
Quick ratio
1.53x
Total debt
$43.52M
Total cash
$63.05M
Growth
How the business has been compounding
Revenue TTM
$173.76M
Revenue 5Y CAGR
1.0%
EPS TTM
-0.25
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$107.87M
Free CF TTM
$105.68M
FCF margin
60.8%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2018-05-24