Is it a good company at a reasonable price? As I mentioned last Wednesday, I bought some of this stock with my fooling around money. I understand the risks I am taking with this money. They have cancelled their dividend and generally this is a negative, but I also think it is a reasonable thing for this company to do. So any investment will no longer be saved by dividends. This stock is testing as relatively cheap.
I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). Fred Poulin from StockTwits recommended this stock saying it was a small cap that pay dividends. Also, the stock has a solid background and would be a good filler stock.
When I was updating my spreadsheet, I noticed they lost money this year mainly due to writing off their Goodwill and taking a Provision for Credit Losses. There stock took a deep dive during covid, then recovered up to June 2022, but since then has fallen steadily. They also cut their dividends. This is never a good sign as it tends to signal that the company is not optimistic about the future.
They took a 13.1M loss on a $14.4M loan after the company found irregularities in the collateral reporting by a borrower. This borrower then filed for bankruptcy. Bankruptcy trustee said borrower has been perpetrating a carefully concealed fraud. This occurred in November of 2023. As with a lot of dividends paying stocks, you tend not to lose money, or loss much when they get into problems.
If you had invested in this company in December 2013, for $1,006.08 you would have bought 128 shares at $7.86 per share. In December 2023, after 10 years you would have received $394.88 in dividends. The stock would be worth $590.08. Your total return would have been $984.96. This would be a total loss of 0.26%% per year with 5.20% from capital loss and 4.93% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.86 | $1,006.08 | 128 | 10 | $394.88 | $590.08 | $984.96 |
The current dividend yield has been in the moderate range with dividends currently cancelled. Until dividends were cancelled this year the dividends were in a moderate (2% to 4%) range and around 3%. The 5, 10 and historical median dividend yields are 3.61%, 3.72% and 2.71%. The dividends were cancelled this year after the third quarterly dividend was paid. This company has paid dividends for 36 years. They raised dividends 23 times. They cut dividends 3 times, but all these are recent. The dividend was cancelled in 2024, but I think that this is a reasonable thing for the company to do.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is negative with 5 year coverage far too high at 201%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 33% with 5 year coverage fine at 67%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 18% with 5 year coverage at 22%. The DPR for 2023 for Free Cash Flow (FCF) is good at 27% with 5 year coverage to high at 141%. However, MS has revised FCF going back 10 years. They have done this on a number of stocks. You have wonder how good it is to even bother with FCF. They seem to change their minds every few years on how to calculate FCF. It is therefore not my favourite item.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -13.16% | 200.76% |
| AEPS | 33.09% | 66.65% |
| CFPS | 17.91% | 21.87% |
| FCF | 26.71% | 141.49% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is high at 9.79 and currently at 11.37. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2023 which is good at 0.0.81 and currently at 0.0.81 because this is an important one for a Financial. The Liquidity Ratio for 2023 is good at 15.25 and 14.28 currently. The Debt Ratio for 2023 is fine at 1.21 and 1.22 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 6.12 and 5.06 and currently at 15.88 and 4.83. (This is a financial and note the same ratios are 17.03 and 16.03 for the Royal Bank.)
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 9.79 | 11.37 |
| Lg Term A | 0.81 | 0.81 |
| Intang/GW | 0.08 | 0.09 |
| Liquidity | 15.25 | 14.28 |
| Liq. + CF | 14.36 | 15.08 |
| Debt Ratio | 1.21 | 1.22 |
| Leverage | 6.12 | 5.88 |
| D/E Ratio | 5.06 | 4.83 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | -8.97% | -8.90% | -12.70% | 3.80% |
| 2013 | 10 | -3.46% | -0.26% | -5.20% | 4.93% |
| 2008 | 15 | -0.43% | 4.24% | -1.53% | 5.77% |
| 2003 | 20 | 0.59% | 4.25% | -2.10% | 6.35% |
| 1998 | 25 | 0.47% | 7.23% | 0.28% | 6.95% |
| 1993 | 30 | 5.93% | 8.44% | 1.70% | 6.74% |
| 1992 | 31 | 7.16% | 11.04% | 3.08% | 7.96% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.05, 12.34 and 13.62. The corresponding 10 year ratios are 10.24, 11.44 and 12.65. The corresponding historical ratios are 8.56, 10.42 and 11.75. The current P/E Ratio is 6.72 based on a stock price of $4.10 and EPS estimate for 2024 of $0.61. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 14.48, 16.16, 17.84. The corresponding 10 year ratios are 8.75, 9.76 and 11.14. The current P/AEPS is 6.72 based on AEPS estimate for 2024 of $0.61 and a stock price of $4.10. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $11.26. The 10-year low, median, and high median Price/Graham Price Ratios are 0.61, 0.69 and 0.76. The current P/GP Ratio is 0.36 based on a stock price of $4.10. The current ratio is below the low ratio of the 10 year median ratios. 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 0.92. The current P/B Ratio is 0.44 based on a Book Value of $79M, Book Value per Share of $9.23 and a stock price of $4.10. The current ratio is 52% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. I also have a Book Value per Share estimate for 2024 of $10.09. This implies a ratio of 0.41 based on a stock price of 4.10 with a Book Value of $86.4M. This ratio is 56% 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 which is negative and so useless for testing. However, the current ratio is a very low one of $0.32 based on last 12 months of Cash Flow of $109.6M, Cash Flow per Share of $12.80 and a stock price of $4.10. This suggests that the stock price is relatively cheap.
They have just cancelled their dividends, so I cannot do any dividend testing.
The 10-year median Price/Sales (Revenue) Ratio is 1.76. The current P/S Ratio is 0.44 based on Revenue estimate for 2024 of $80M, Revenue per Share of $9.35 and a stock price of $4.10. The current ratio is 75% 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. The test for P/S Ratio says this. All the other tests are saying the same thing.
When I look at analysts’ recommendations, I find one Strong Buy. The 12 month target price is $8.60. There is only one analyst following this according to Market Screener. Yahoo Finance says there are two analysts, both with a Buy recommendation, and with a one target of $8.60. Wall Street Journal (WSJ) has one analyst and a Strong Buy. The target price of $8.60 implies a total return of 109.76%, all from capital gains.
This stock is not well followed on Stock Chase and the last two entries were a buy but occurred in 2013 and 2014. Stock Chase gives this stock 1 star out of 5. There are no entries on Motley Fool. I found a report on this stock at Leede Financial. This is a PDF. They are on Twitter @accordfincorp.
Accord Financial Corp is a provider of asset-based financial services to businesses. The company's 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 company's revenue comprises interest, including discount fees, and factoring commissions from the company's asset-based financial services, including factoring and leasing, and is measured at the fair value of the consideration received. The company's geographical segments include Canada and the United States. Its web site is here Accord Financial Corp.
The last stock I wrote about was about was Cargojet Inc (TSX-CJT, OTC-CGJTF) ... learn more. The next stock I will write about will be Telus Corp (TSX-T, NYSE-TU) ... learn more on Wednesday, September 11, 2024 around 5 pm. Tomorrow on my other blog I will write about Canadian Banks .... learn more on Tuesday, September 10, 2024 around 5 pm.
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