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. 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.
When I was updating my spreadsheet, I noticed that in 2020 they cut their dividends by 44%. A cut in dividend signals that management feels that the near future is not going to be good for the company.
The dividend yields are moderate with dividend growth stopping. The current dividend yield is moderate (2% to 4% range) at 2.34%. The 5, 10 and historical dividend yields are also moderate at 3.86%, 3.88% and 2.63%. They have been raising their dividends since 1990, but in 2020 the dividend was cut. The median dividend increase for the past 10 years is 2.99%. So, increases were low. It did have some good dividend increases before the financial crisis of 2008.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 was 480% with 5 year coverage at 47%. The EPS were very low in 2020. The DPR for EPS is expected to be around 28% in 2021. The DPR for CFPS for 2020 was 186% with 5 year coverage at 20%. The DPR for Free Cash Flow for 2020 was 8.8% with 5 year coverage at 5.75%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 3.68. Because it is a Financial, I looked also at Long Term Debt/Current Asset Ratio which is 0.59 and that is a good ratio. I calculate the Liquidity Ratio to be 12.05, but this is generally not important for Financials. The Debt Ratio is fine for a financial at 1.32.
The Total Return per year is shown below for years of 5 to 28 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -7.27% | -2.92% | -6.94% | 4.02% |
| 2010 | 10 | -1.53% | 3.47% | -1.12% | 4.59% |
| 2005 | 15 | 1.94% | 3.90% | -0.34% | 4.24% |
| 2000 | 20 | 0.92% | 6.66% | 0.90% | 5.76% |
| 1995 | 25 | 0.73% | 9.97% | 3.48% | 6.49% |
| 1992 | 28 | 8.64% | 11.61% | 4.81% | 6.80% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.05. 12.34 and 13.19. The corresponding 10 year ratios are 9.01, 10.63 and 11.95. The corresponding historical ratios are 8.57, 10.59 and 11.94. The current P/E Ratio is 11.88 based on a stock price of $8.55 and EPS estimate for 2021 of $0.72. The P/E Ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
However, I only got one estimate for EPS. I have a value for the last 12 months for EPS and it is for $0.89. The P/E Ratio with a stock price of $8.55 would be 9.61. This P/E Ratio is between the low and median 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $13.32. The 10 year low, median, and high median Price/Graham Price Ratios are 0.64, 0.73 and 0.79. The current P/GP Ratio is 0.64 based on a stock price of $8.55. This ratio is at the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.11. The current P/B Ratio is current ratio is 0.78 based on a stock price of $8.55, Book Value of $93.8M, and a Book Value per Share of 10.96. The current ratio is 29% 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 2.69. The current P/CF Ratio is 1.20 based on the last 12 month’s cash flow of $61.2M, Cash Flow per Share of $7.15 and a stock price of 8.55. The current ratio is 56% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 2.63%. The current dividend yield is 2.34% based on a stock price of $8.55 and dividends of $0.20. This dividend yield is 11% above the historical year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and above the median.
I get a 10 year median dividend yield of 3.88%. The current dividend yield is 2.34% based on a stock price of $8.55 and dividends of $0.20. This dividend yield is 40% above the historical year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 2.32. The current P/S Ratio is 1.35 based on Revenue for the last 12 months of $54.1M, Revenue per Share of $6.32 and a stock price of $8.55. The current ratio is 42% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap to reasonable. The P/S Ratio testing shows this this stock as cheap as does the P/CF test. The dividend yield tests show the stock from reasonable to expensive, however, since dividends were cut by 44%, the dividend tests are not good. It is only one dividend test that show the stock as expensive.
Is it a good company at a reasonable price? The stock price would be cheap to reasonable. However, a big dividend cut in 2020 does signal that managements feels negative or uncertain about the near future. It may not be a good time to buy this company.
When I look at analysts’ recommendations, I find a Buy (1) recommendation. The consensus would be a Buy. The 12 month stock price is $8.80. This implies a total return of 5.26% with 2.92% from capital gains and 2.34% from dividends.
The analysts on this site have made positive remarks about this company in the past on Stock Chase but none have commented since 2014. Motley Fool has no comments on this company. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 5 risks. A writer on Simply Wall Street is concerned for the dividends because of shrinking earnings. A writer on Simply Wall Street talks about insider trading. The company posted on Newswire their second quarterly results for 2021.
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. Geographically, it derives a majority of revenue from the United States. Its web site is here Accord Financial Corp.
The last stock I wrote about was about was Just 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 Wednesday, September 8, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks September 2021 .... learn more on Tuesday, August 3, 2021 around 5 pm..
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