Why Yellow Media Shares Went Red

Is this meaningful? Or just another movement?

| More on:
The Motley Fool
10% Promise Series

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of digital and print media company Yellow Media (TSX:Y) plunged about 10% on Thursday after its quarterly results disappointed Bay Street.

So what: The stock has soared over the past six months on optimism over the company’s digital transformation, but today’s Q4 results — EBITDA plunged 36% to $91.3 million as revenue sank 10% to $238 million — are forcing Mr. Market to sober up a bit. In fact, operating margins narrowed to 38.3% versus 53.6% in the year-ago period, suggesting that the transition is becoming more expensive than analysts had expected.

Now what: Management remains bullish about its longer-term digital growth prospects. “Yellow Media is strongly positioned to proceed with the second phase of its digital transformation,” said President and CEO Julien Billot. “Our end goal is to grow Yellow Media into a sustainable local digital media company by extending the reach of our brand, attracting new digital audiences, better addressing our advertisers’ needs and investing in our employees.”

Of course, when you couple the uncertainty surrounding Yellow Media’s restructuring with its still-red hot stock price — up more than 100% since October — the risk/reward tradeoff remains rather unappealing.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned.

More on Investing

A worker gives a business presentation.
Stocks for Beginners

2 Reasons to Buy Onex Stock Like There’s No Tomorrow

Onex (TSX:ONEX) stock has been a strong performer over the years, both in terms of growth and dividends that investors…

Read more »

Canadian Dollars
Stocks for Beginners

The Best Stocks to Invest $5,000 in Right Now

Are you looking to put some cash into the stock market? Here are three picks to put on your watch…

Read more »

calculate and analyze stock
Dividend Stocks

Got $1,000? 3 Dividend Stocks to Buy and Hold Forever

Dividend stocks like Restaurant Brands International (TSX:QSR) can pay substantial amounts of passive income.

Read more »

financial freedom sign
Bank Stocks

This Ridiculously Cheap Warren Buffett Stock Could Help Make You Richer

American Express stock is part of Warren Buffett's equity portfolio, and the stock trades at a steep discount in 2024.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, February 26

After rising for two weeks in a row, the main TSX index is now at its highest level in more…

Read more »

stock analysis

Buy the Dip: 2 Stocks to Buy Today and Hold for the Next 5 Years

These Canadian stocks are trading at discounted valuations, providing an opportunity for buying the dip.

Read more »

bulb idea thinking

Safety in Size? 2 of the Bluest Blue-Chip Stocks I’d Buy Now

TC Energy (TSX:TRP) and another cash cow have huge dividend yields for safe investors.

Read more »

A cannabis plant grows.
Cannabis Stocks

Can Aurora Cannabis Stock Recover in 2024?

Aurora Cannabis stock is down 99% from all-time highs but remains a high-risk bet, despite its cheap valuation.

Read more »