The iSentia Group Ltd (ASX: ISD) share price has rocketed higher this week, surging more than 14% between Monday and Tuesday. It has retreated 6 cents, or 3.6% again today, although that is at least partially due to the shares going ex-dividend today. The company recently declared a 3.1 cents per share dividend, fully franked, which equates to a gross 4.4 cents per share.
Unfortunately, iSentia's rally this week will likely have done little to appease long-term shareholders who have watched their shares plummet in recent months. Indeed, the shares traded as high as $4.14 as recently as October but have since endured two substantial re-ratings – one in November and one in February. At $1.605, they have fallen 61.2% since that peak.
iSentia's King Content business is one of the primary culprits behind the most recent decline. During the first half of financial year 2017, the Content Marketing segment (which includes King Content) saw its revenue decline 11% year-on-year, with a $2 million loss in earnings before interest, tax, depreciation and amortisation (EBITDA). It expects a full-year EBITDA loss of $3 million for the segment.
So, although iSentia has been among the market's best performers this week, it seems likely that the rally has simply come as a result of the market realising the stock may have become oversold. That is entirely possible and, if iSentia can improve King Content's performance and grow its organic business, today's price tag could prove an attractive entry point.
That said, risk-averse investors may want to steer clear of this business, at least until the company can demonstrate that it is back on track towards long-term growth.
