Digital Media Solutions (NYSE: DMS) is one of the smallest microcapitality stocks in our world of coverage, but it deserves its place. The company specializes in digital marketing with a focus on performance marketing based on a model of dynamic diversification. The model allows the company to adjust when, where and how it delivers ads to maximize its own revenue and also the impact of advertising on its customers.
The stock does not receive too much coverage from the community on the sales side, but it is a problem with tight holding. Institutions own only 2% of the company, but insiders control almost 88%, giving a total revenue share of more than 90% and also having some analyst support. There are only three current ratings and only one shout since the last version with revenue, but it’s strong.
Cannacord Genuity maintained its Buy rating, but lowered its price target to $ 8 from $ 10. This is good compared to the Marketbeat.com consensus of $ 11.50, which means about a 300% increase in the stock and $ 3.00 for which the stock actually trades.
Digital Media Dynamic Marketing Solutions Pay
Digital Media Solutions had a mixed Q4, but was only involved in the consensus of three analysts, and we did not place much confidence in these numbers because most analysts did not issue any comments or updates for many months. Revenues of $ 119 million are therefore 16% higher than last year, which is 530 basis points better than the consensus value and business record. Profits were strongly driven by both major business segments with Brand Direct at 17% and Market Solutions at 25%.
Insurance, the company’s largest source of revenue, grew 13%, while e-commerce revenue grew 36%. On an industrial basis, car insurance accounts for 28% of revenue, health insurance for 23%, e-commerce for 20%, career / education for 10% and consumer finance for the remaining 85%.
Moving to the margin, the company’s gross margin increased by 300 basis points, but the gains were offset by a non-monetary loss on the bottom line. All in all, a $ 0.11 GAAP loss fails by $ 0.12 consensus, but adjusted earnings are better. On a revised basis, $ 15 million in EBITDA is stagnant year-over-year and the company is leading the way for fiscal growth in 2022.
Back to the forecast, the company expects a steady decline in companies in the 1st quarter due to the end of open enrollment in health insurance. In addition, however, Q1 revenue is expected to grow by at least 2.5% in the lower part of the range and to improve in the second half of the year. The full-year outlook assumes 8.6% revenue growth at the bottom of the spread and has high-risk figures.
The company’s retention rate for most clients reaches 100% and is growing in the customer base. Shares of Digital Media Solutions have been declining for more than a year, but may have bottomed out. The price action can be seen to find support at the current level with indicators set for bull signals. Not only is the stochastic already showing an upward crossover, but the MACD is also ready to fire, deep at the bottom of the range.
If this signal confirms the price action, we expect a change and eventually return to the $ 10 range. Otherwise, this stock is likely to remain at the same level with a chance to reach a new low.