I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). If I was looking for a small cap financial stock, I would consider this stock. The dividend is good and it does raise the dividend regularly. It has had some problems recently, but a lot of companies are with this long drawn out recover. As with all small cap stocks there is low trading volume. Fred Poulin from StockTwits recommended this stock saying it was a small cap that pay dividends.
When I was updating my spreadsheet, I noticed that the company hit a peak in 2015 with Revenue, Earnings and Stock Price. Only the Revenue had recovered 2018. This year is filled with uncertainty with the Covid 19 and the effect of Covid 19 on the economy is why the dividend was cut.
I was looking at the total return for the last 5 years to different years. So, in this chart, the total return of the end of December 2015 for the previous 5 years (i.e. from 2010) was 8.95% and the total return to the end of December 2015 for the previous 10 years (i.e. From 2005) was 6.54%. Returns are moderate to good.
| To Date | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 |
|---|---|---|---|---|---|
| 5 year Total Return | 8.95% | 9.89% | 10.03% | 7.18% | 5.21% |
| 10 year Total Return | 6.54% | 5.02% | 5.01% | 9.11% | 11.53% |
The dividend yields are moderate with dividend growth currently non-existent. The current yield is moderate (2% to 4% range) at 3.39%. The 5,10 and historical dividend yields are also moderate at 3.86%, 3.94% and 2.63%. The dividends were flat from 2016 and in 2020, the company cut their dividends by 44%. However, this stock might again in the future become a dividend growth stock.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 is 47% with 5 year coverage at 39%. The DPR for CFPS is 33% with 5 year coverage at 18%. The DPR for Free Cash Flow for 2020 is 6% with 5 year coverage also at 6%. The Dividend Coverage Ratio 15.64 with the 5 year ratio at 16.58.
Debt Ratios are deteriorating. The Long Term Debt/Market Cap Ratio for 2020 is 2.91, but this can happen with Financials. The Long Term Debt/Asset Ratio for 2020 is 0.65. The Liquidity Ratio for 2020 is 14.73, but it is not an important ratio for Financials. The Debt Ratio is low at 1.31. It has a 5 year median of 1.47 which is also on the low side, but low ones are acceptable for Financials. The Leverage and Debt/Equity Ratios for 2020 are 4.39 and 3.35 with 5 year medians of 3.28 and 2.24.
It is not so much that the debt ratios are bad for a financial, but the real problem I see with debt ratios is that they are all been deteriorating. For example, in 2016 the Long Term Debt/Market Cap Ratio was 0.79, the Debt Ratio was 1.96 and the Leverage and Debt/Equity Ratios were 2.05 and 1.05.
The Total Return per year is shown below for years of 5 to 27 to the end of 2019. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 1.76% | 5.21% | 1.49% | 3.72% |
| 2009 | 10 | 3.31% | 11.53% | 6.73% | 4.80% |
| 2004 | 15 | 4.73% | 4.01% | 0.94% | 3.07% |
| 1999 | 20 | 2.98% | 7.83% | 3.07% | 4.76% |
| 1994 | 25 | 2.38% | 11.95% | 6.08% | 5.86% |
| 1992 | 27 | 10.11% | 12.34% | 6.58% | 5.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.03, 11.68 and 12.34. The corresponding 10 year ratios are 8.56. 10.04 and 11.52. The corresponding historical ratios are 8.56, 10.42 and 11.75. The current P/E Ratio is 8.19 based on a stock price of $5.90 and 2020 EPS estimate of $5.90. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $12.90. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.72 ad 0.79. The current P/GP Ratio is 0.46 based on a stock price $5.90. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.19. The current P/B Ratio is 0.57 based on a stock price of $5.90, Book Value of $87.9M and a Book Value per share of $10.27. The current ratio is 52% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 1.06. The current P/CF Ratio is 0.93 based on a stock price of $5.90, last 12 months Cash Flow of $54.37M, and Cash Flow per Share of $6.35. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 2.63%. The current dividend yield is 3.39% based on dividends of $0.20 and a stock price of $5.90. The current dividend yield is 29% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.94%. The current dividend yield is 3.39% based on dividends of $0.20 and a stock price of $5.90. The current dividend yield is 14% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.32. The current P/S Ratio is 0.91 based on 2020 Revenue estimate of $55.7M, Revenue per Share of $6.51 and a stock price of $5.90. The current ratio is 61% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio says this as does a number of other tests. The historical dividend yield test confirms the stock price is cheap, but the 10 year dividend yield test does not. This is because of the recent dividend cut.
Is it a good company at a reasonable price? The stock price seems cheap at present. The problem is the company is currently not doing well and it was having problems before Covid struck. I think buying this company is risky, but it might do well once we are past the current problem.
When I look at analysts’ recommendations, I find a Buy (1) recommendation. There is not 12 month stock consensus that I can find.
There are no recent entries on Stock Chase. Old entry said it was well run, but site gives this stock a score of 1 of 5. A writer on Simply Wall Street found this stock to be an attractive dividend stock in November 2019. The Executive Summary on Simply Wall Street gave this company 2 stars out of 5 and list 5 risks and no postives. A writer on Simply Wall Street in May 2020 thought you should look for better opportunities than this stock. The company talks about its first quarter of 2020 on Newswire.
Accord Financial Corp is a provider of asset-based financial services to businesses. Its asset-based financial services include asset-based lending, including factoring, lease financing, working capital financing, credit protection and receivables management, and supply chain financing for importers. The group has a business presence in the United States and Canada. Its web site is here Accord Financial Corp.
The last stock I wrote about was about was Energy Group Inc (TSX-JE, NYSE-JE) ... learn more. The next stock I will write about will be Telus Corp (TSX-T, NYSE-TU) ... learn more on Monday, September 14, 2020 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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