Friday, February 3, 2023

Absolute Software Corporation

Sound bite for Twitter and StockTwits is: Dividend Paying Tech. The stock price might be reasonable. There are few good Debt Ratios and this is a problem. The Dividend Payout Ratios (DPR) are fine for Cash Flow, but should the company pay a dividend if they cannot earn a profit? See my spreadsheet on Absolute Software Corporation.

Is it a good company at a reasonable price? This would not be a company I would invest in. It is not a dividend growth stock. I wonder if it makes sense for this stock to pay a dividend at all. I do not like most of the Debt Ratios and I find the debt too high. I also do not like the fact that it is difficult to do valid stock price testing. The price would seem to be at a reasonable level. I think that this is a stock to buy for capital gains, but there are lots of risks involved.

I do not own this stock of Absolute Software Corporation (TSX-ABST, NASDAQ-ABST). The Motley Fool published an article by Matt DiLallo in December 2014 called The 10 Best Stocks in Canada. It is basically a list of the best-performing Canadian stocks of the past decade.

When I was updating my spreadsheet, I noticed the EPS loss was due to cost that were higher than Revenue, with a Ratio of 1.04. Interest expense is up because of the debt going from $0 to 264M. The Long Term Debt/Market Cap Ratio is now 0.60. Also, the Intangible assets went from $0 to $117.54M and the Goodwill went from $1.10M to $240.76M. The Intangible and Goodwill/Market Cap Ratio went from 0.00 to 0.85. On July 1, 2021, the Company completed the acquisition of 100% of NetMotion Software Inc.

If you had invested in this company in December 2012, for $1,004.70 you would have bought 197 shares at $5.10 per share. In December 2022, after 10 years you would have received $577.21 in dividends. The stock would be worth $2,785.58. Your total return would have been $3,362.79.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$5.10 $1,004.70 197 10 $577.21 $2,785.58 $3,362.79

The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4% ranges) at 2.01%. The 5, 10 and historical dividend yields are also moderate at 3.05%, 3.46% and 3.46%. The last dividend increase was in 2017 and dividends have been flat since. Dividends are paid in CDN$ although the reporting for this company is in US$.

The Dividend Payout Ratios (DPR) are fine for Cash Flow, but should the company pay a dividend if they cannot earn a profit? The DPR for EPS for 2022 is negative because of an earnings loss. The 5 year coverage is 1,297%. The DPR for Cash Flow per Share (CFPS) for 2022 is 31% with 5 year coverage at 39%. The DPR for Free Cash Flow (FCF) for 2022 is 33% with 5 year coverage at 56%.

There are few good Debt Ratios and this is a problem. The company took on Long Term Debt in 2022 and their Long Term Debt/Market Cap went from 0.00 to 0.60. They also took on Intangibles and goodwill assets in 2022. Their Intangibles Goodwill/Market Cap Ratio went from 0.00 to 0.81. They also have debt of Deferred Revenue, which really complicates things.

The Liquidity Ratio for 2022 is low at 0.78. Adding in Cash Flow after dividends just gets you to 0.94. If you consider Deferred Revenue, then the ratio is 3.37. The Debt Ratio is low at 1.01. I like to see this ratio at 1.50 or higher. The Leverage and Debt/Equity Ratios are really high at 173.68 and 172.68. I prefer these to be under 2.00 and 1.00. So, these last ratios are awful. If you account for Deferred Revenue, they are 2.60 and 2.59, so the Debt/Equity Ratio is still too high.

The Total Return per year is shown below for years of 5 to 22 to the end of 2022 in CDN$. 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.
2017 5 0.00% 19.09% 15.50% 3.59%
2012 10 5.36% 14.44% 10.74% 3.70%
2007 15 -0.50% -1.72% 1.22%
2002 20 27.80% 24.38% 3.42%
2000 22 18.94% 16.85% 2.09%

The Total Return per year is shown below for years of 5 to 21 to the end of 2022 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below. The differences in the CDN$ and US$ return is due to currency exchange and the stock is not as often traded in the US market.

From Years Div. Gth Tot Ret Cap Gain Div.
2017 5 0.14% 17.44% 13.88% 3.55%
2012 10 3.14% 10.84% 7.49% 3.35%
2007 15 -2.51% -3.69% 1.18%
2002 20 25.91% 22.51% 3.40%
2001 21 23.65% 20.72% 2.93%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 29.42, 34.32, and 42.22. The corresponding 10 year ratios are 40.32, 51.17 and 61.88. The corresponding historical ratios are negative and so of no value. The current P/E Ratio is negative and so of no value. The P/E Ratio for 2024 is 239.17 and the P/E Ratio for 2025 is 42.71. This last ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, the P/E Ratios are very high. Also, the further out an estimate is, the more likely it is to be very wrong. So, this is not a good test.

I estimate a Graham Price of $2.75. The 10-year low, median, and high median Price/Graham Price Ratios are 2.41, 3.27 and 3.99. The current P/GP Ratio is 5.79 based on a stock price of $15.93. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

This test does not improve with the 2024 P/GP Ratio of 6.51 with a Graham Price of $2.45. The Graham Price for 2025 is 5.79 and will give a P/GP Ratio of 2.75 based on a current stock price of $15.93. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. It has the same problem as with the P/E Ratio testing in that the further we go out with estimates the more unreliable they tend to be.

I get a 10-year median Price/Book Value per Share Ratio of 2.59 when I look at Book Value excluding Deferred Revenue. The current P/B Ratio is 3.06 based on a stock price of $11.96 and Book Value of $200M. The current P/B Raito is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.

I get a 10-year median Price/Cash Flow per Share Ratio of 16.00. The current P/CF Ratio is 13.00 based on Cash Flow per Share estimate for 2023 of $0.92, Cash Flow of $47M and a stock price of $11.96. The current ratio is 19% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.

I get an historical median dividend yield of 3.46%. The current dividend yield is 2.01% based on dividends of $0.32 and a stock price of $15.93. The current yield is 42% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem with this testing is that the dividends have been flat for 6 years.

I get a 10 year median dividend yield of 3.46%. The current dividend yield is 2.01% based on dividends of $0.32 and a stock price of $15.93. The current yield is 42% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem with this testing is that the dividends have been flat for 6 years.

The 10-year median Price/Sales (Revenue) Ratio is 2.77. The current P/S Ratio is 2.53 based on Revenue estimate for 2023 of $242M, Revenue per Share of $4.73 and a stock price of $11.96. The current is 9% 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 might be reasonable. The P/S Ratio test is good and it shows the stock price is reasonable. The other good test is the P/CF test which also shows the stock price as reasonable. There are problems with most of the other testing. It is never a good sign when there are problems with most of the testing.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $14.85 ($11.15 US$). This implies a loss of 4.75% with a capital loss of 6.76% and dividends of 2.01% based on a current price of $15.93. the recommendations and 12 month consensus on the stock price seems at odds.

Analyst on Stock Chase think this stock is a Buy. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense List. Ambrose O'Callaghan on Motley Fool is impressed with the recent run up in this stock. Sneha Nahata on Motley Fool thinks that this company can be a solid long-term stock one can buy under $20. The company put out a Press Release on their 2022 results. A Simply Wall Street report on Yahoo Finance looks at this stock and says it is not a good dividend stock. Simply Wall Street gives this stock 3 stars out of 5. It also lists 4 warnings of negative shareholders equity; has a high level of debt; dividend of 1.99% is not well covered; and shareholders have been diluted in the past year

Absolute Software Corp is engaged in the development, marketing, and provision of a cloud-based endpoint visibility and control platform that provides management and security of computing devices. Geographically, it derives a majority of revenue from the United States and also has a presence in Canada and the Rest of world. Its web site is here Absolute Software Corporation.

The last stock I wrote about was about was Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more. The next stock I will write about will be Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more on Monday, February 6, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, February 1, 2023

Exco Technologies Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price is cheap. Dividend Growth Industrial. Debt Ratios are good. The dividend yields are good with dividend growth low. The Dividend Payout Ratios (DPR) are fine. See my spreadsheet on Exco Technologies Ltd.

Is it a good company at a reasonable price? This is a small industrial company that seems beaten up. It would be a risky buy. They are still increasing their dividends, so the company has confidence in the future. The price is currently cheap.

I do not own this stock of Exco Technologies Ltd (TSX-XTC, OTC-EXCOF). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past.

When I was updating my spreadsheet, I noticed analysts expected sales to go up almost 20% to $552M, but they only went up 6% to $490M. Analysts also expected the EPS to go up 29% to 1.26, but instead EPS went down 50% to $0.49. Their costs went up more than the revenue. Cost to Revenue Ratio for 2021 was 0.89 and for 2022 was 0.95. Their interest expense went up the most.

There was insider buying over the past year. The Net Insider Buying Ratio is 5.81% where generally this ratio is between 0.01% to -0.01%. For example, the CEO increased his shareholding by 67% and one director increased his share holdings by 25%.

If you had invested in this company in December 2012, for $1,005.71 you would have bought 163 shares at $6.17 per share. In December 2022, after 10 years you would have received $497.56 in dividends. The stock would be worth $1,255.10. Your total return would have been $1,752.66.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$6.17 $1,005.71 163 10 $497.56 $1,255.10 $1,752.66

The dividend yields are good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 5.53%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.38%, 3.37% and 2.89%. The dividend growth is low (below 8% per year) at 6% per year over the past 5 years. The last dividend increase was in 2022 and it was for 5%.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 85% with 5 year coverage at 49%. The DPR for Cash Flow per Share (CFPS) for 2022 is 32% with 5 year coverage at 27%. The DPR for Free Cash Flow (FCF) for 2022 is 219% with 5 year coverage at 50%. (Note: I am using FCF provided by the company.)

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is low and good at 0.32. The Liquidity Ratio for 2022 is high and good at 2.27. The Debt Ratio for 2022 is high and good at 2.53. The Leverage and Debt/Equity Ratios for 2022 are low and good at 1.65 and 0.65.

The Total Return per year is shown below for years of 5 to 32 to the end of 2022. 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.
2017 5 6.01% -1.23% -5.36% 4.13%
2012 10 11.88% 6.54% 2.24% 4.30%
2007 15 13.76% 8.33% 4.57% 3.76%
2002 20 11.78% 2.96% 0.62% 2.33%
1997 25 3.55% 1.61% 1.94%
1992 30 7.57% 5.51% 2.06%
1990 32 11.80% 9.28% 2.52%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.73, 9.75 and 12.67. The corresponding 10 year ratios are 9.06, 11.60 and 14.17. The corresponding historical ratios are 8.73, 13.17 and 15.68. These are consistent so it makes it a more valid test. The current P/E Ratio is 10.41 based on a stock price of $7.60 and EPS estimate for 2023 of $0.73. The current ratio is between the low and median ratios 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 Graham Price of $11.76. The 10-year low, median, and high median Price/Graham Price Ratios are 0.66, 0.80 and 0.97. The current ratio is 0.65 based on a stock price of $7.60. 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 1.28. The current P/B Ratio is 0.90 based on a stock price of $7.60, Book Value of $328M and Book Value per Share of $8.42. The current ratio is 30% 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 8.87. The current ratio is 8.12 based on Cash Flow estimate for 2023 of $36.4M, Cash Flow per Share of $0.94 and a stock price of $7.60. This ratio is 8% 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 2.89%. The current dividend yield is 5.53% based on a dividend of $0.42 and a stock price of $7.60. The current ratio is 91% 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 3.37%. The current dividend yield is 5.53% based on a dividend of $0.42 and a stock price of $7.60. The current ratio is 64% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 0.77. The current P/S ratio is 0.51, based on a stock price of $7.60, Revenue estimate for 2023 of $580M and Revenue per share of $14.91. The current ratio is 33% 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 dividend yield tests say that the stock price is cheap and it is confirmed by the P/S Ratio test. Most of the other tests say it is cheap or reasonable and below the median.

When I look at analysts’ recommendations, I find Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $10.63. This implies a total return of 45.39% with 39.87% from capital gains and 5.53% from dividends based on a current stock price of $7.60.

The company seems to be liked on Stock Chase by analysts. It is not well followed and the last entry is a Buy. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense List. Christopher Liew on Motley Fool thinks this company has a bright future. Amy Legate-Wolfe on Motley Fool thinks this is a good dividend stock, cheap. The company put out a press release via Glove Newswire about their 2022 results. Simply Wall Street via Yahoo Finance talks about who owns this company.

Exco Technologies Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. The company reports in two business segments namely, the Casting and Extrusion segment and Automotive Solutions segment. It generates maximum revenue from the Automotive Solutions segment. Geographically, it derives a majority of its revenue from the United States. Its web site is here Exco Technologies Ltd.

The last stock I wrote about was about was Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more. The next stock I will write about will be Absolute Software Corporation (TSX-ABST, NASDAQ-ABST) ... learn more on Friday, February 3, 2023 around 5 pm. Tomorrow on my other blog I will write about Future Crunch.... learn more on Thursday, February 2, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, January 30, 2023

Shaw Communications Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Telecom. Stock price is relatively expensive. It will probably be bought by Rogers. Debt Ratios are fine. The Dividend Payout Ratios (DPR) are fine. The dividend yields are moderate with dividend growth non-existent. See my spreadsheet on Shaw Communications Inc .

Is it a good company at a reasonable price? Since it will be bought by Rogers, I see no point in a small individual investor investing in this stock. The stock price is close to the buy out price. The gain has been made already. There is not much upside for small investors. It will be interesting how this all turns out. If for any reason the sale does not go through, the price for this stock will fall.

I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, a MPL Communications Publication.

When I was updating my spreadsheet, I noticed that they site does not work very well. Menu lines at top right do not work. I could not open previous annual reports as they would not come up. Good job that there are other places to find Annual Reports, like Annual Reports. I also could not find the list of Directors or the Leadership and had to google to get this information. This is supposed to be a tech company selling internet services? The site was most annoying.

The other thing to note is that Rogers Communications Inc (TSX-RCI.B, NYSE-RCI) is trying to buy Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). It will probably happen. I also noticed that last year in estimates, analysts expected the company to start to raise dividends in 2023. Now they do not see any raising of dividends any time soon.

If you had invested in this company in December 2012, for $1,004.96 you would have bought 44 shares at $22.84 per share. In December 2022, after 10 years you would have received $505.67 in dividends. The stock would be worth $1,716.44. Your total return would have been $2,222.11.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$22.84 $1,004.96 44 10 $505.67 $1,716.44 $2,222.11

The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to4% ranges) at 2.98%. The 5 and 10 year median dividend yields are also moderate at 4.39% and 4.27%. The historical dividend yield is low (below 2%) at just 1.66%. I have dividend information covering 32 years and until 2008, the dividend yield was below 2%. The dividends have been flat since 2017. It does not look like any analyst expect future dividend increases.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 78% with 5 year coverage at 94%. The DPR for Cash Flow per Share (CFPS) for 2022 is 30% with 5 year coverage at 32%. There is disagreement about what the Free Cash Flow (FCF) is. However, for the FCF put out by the company, the DPR for 2022 is 73% with 5 year coverage also at 73%.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.27. The Liquidity Ratio is low at 0.86. If you add in cash flow after dividends, it is 1.49 and not quite up to the ratio I like of 1.50. The Debt Ratio is good at 1.65. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.53 and 1.53.

The Total Return per year is shown below for years of 5 to 32 to the end of 2022. 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.
2017 5 0.00% 10.02% 6.34% 3.68%
2012 10 2.29% 9.52% 5.50% 4.02%
2007 15 5.99% 6.86% 3.40% 3.47%
2002 20 21.28% 12.27% 8.16% 4.11%
1997 25 18.37% 14.29% 10.41% 3.88%
1992 30 15.68% 12.99% 9.93% 3.07%
1990 32 15.29% 14.78% 11.44% 3.34%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 16.96, 18.42 and 20.93. The corresponding 10 year ratios are 13.44, 15.96 and 18.42. The corresponding historical ratios are 14.58, 16.53 and 19.08. The current P/E Ratio is 25.49 based on a stock price of $39.76 and EPS estimate for 2023 of $1.56. The current ratio is above the high of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $21.22 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.31 and 1.48. The current P/GP Ratio is 1.87 based on a stock price of $39.76. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

I get a 10-year median Price/Book Value per Share Ratio of 2.42. The current P/B Ratio is 3.10 based on a stock price of $39.76, Book Value of $6,411M and a Book Value per Share of $12.83. The current ratio is 38% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I have a Book Value per Share estimate for 2023 of $13.00. This implies a book value of $6,496M and a P/B Ratio 3.06 based on a stock price of $39.76. The is ratio of 3.06 is 26% above the 10 year median P/B Ratio of 2.42. This stock price testing suggests that the stock price is relatively expensive.

I get a 10-year median Price/Cash Flow per Share Ratio of 8.10. The current P/CF Ratio is 9.56 based on Cash Flow per Share (CFPS) estimate for 2023 of $4.16, Cash Flow of $2,079M, and a stock price of $39.76. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 1.66%. The current dividend yield is 2.98% based on dividends of $1.185 and a stock price of $39.76. The current yield is 80% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year dividend yield of 4.27%. The current dividend yield is 2.98% based on dividends of $1.185 and a stock price of $39.76. The current yield is 30% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10-year median Price/Sales (Revenue) Ratio is 2.52. The current P/S Ratio is 3.65 based on Revenue estimate for 2023 of $5,444M, Revenue per Share of $10.89 and a stock price of $39.76. This ratio is 45% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably expensive. The 10 year dividend yield test says this and is confirmed by the P/S Ratio test. I am disregarding the historical dividend yield test, as yields change from low to moderate in around 2006 and around 16 years ago and so quite a while ago. All the other testing is supporting an expensive stock price.

When I look at analysts’ recommendations, I find only Hold (10) recommendations. The 12 month stock price target is $40.17. This implies a total return of 4.01% with 1.03% from capital gains and 2.98% from dividends based on a current stock price of $39.76.

Most comments from analysts on Stock Chase is about the Rogers’ deal. They think it will close. Stock Chase gives this stock 4 stars out of 5. It is on the Money Sense list with a C Rating. Vineet Kulkarni on Motley Fool talks about Rogers and the deal to buy Shaw. Jitendra Parashar on Motley Fool talks about Shaw jumping in price after the Canadian competition tribunal approved the proposed Rogers Communications-Shaw merger deal. The company put out a press release on Global Newswire about their fourth quarter of 2022.

The company put out a press release on Global Newswire about their first quarter for 2023. There is an article from the Financial Post on Yahoo Finance about the Commissioner of Competition’s appeal of a tribunal decision to approve their $26-billion merger. Simply Wall Street gives this stock 3 stars out of 5 and list one risk of a high level of debt.

Shaw Communications is a Canadian cable company that is one of the biggest providers of internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. Its web site is here Shaw Communications Inc.

The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Wednesday, February 1, 2023 around 5 pm. Tomorrow on my other blog I will write about Hydro One Ltd.... learn more on Tuesday, January 31, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, January 27, 2023

Enghouse Systems Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Tech. Stock price is reasonable, if not cheap. Debt Ratios are good. The Dividend Payout Ratios (DPR) are good. The dividend yields are low with dividend growth good. See my spreadsheet on Enghouse Systems Ltd.

Is it a good company at a reasonable price? This is a small Tech company, so there is risk in investing in this company. The stock has mostly done well for shareholders in the past. The dividend yields maybe low, but it is increasing quite nicely. For long term investors, the stock price is reasonable, if not cheap. It is the dividend yield tests that says it is cheap. Some people rely only on the dividend yield tests. I also like that the fact that the debt ratios are good. This is important for small cap stocks.

I do not own this stock of Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF). This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend. May 2011.

When I was updating my spreadsheet, I noticed that analysts expected a revenue increase of 3.8% from $467M to $485M, but increased revenue declined by 8% to $428M. However, EPS was basically on target coming in at $1.70 compared to estimate of $1.67.

Also, the company has no long term debt and great Debt Ratios. The Liquidity Ratio is important and this, for 2022 is 2.04 (where a good one is 1.50). The Debt Ratio is also good at 3.58 ( where ones at 1.50 and above are good). The Leverage and Debt/Equity Ratios are also good at 1.39 and 0.39 (where good ones are below 2.00 and below 1.00).

You can see from the following chart that growth has slowed. Growth over the past 5 year some growth is a lot lower, for example Revenue Growth over the past 10 years was at 12% per year but over the past 5 years, it has been at 5.6% per year. It is the same for Cash Flow growth and Stock Price Growth.

Year Item Tot. Growth Per Year
5 Revenue Growth 31.42% 5.62%
5 EPS Growth 81.82% 12.70%
5 Net Income Growth 85.87% 13.20%
5 Cash Flow Growth 23.95% 4.39%
5 Dividend Growth 130.00% 18.13%
5 Stock Price Growth 11.12% 2.13%
10 Revenue Growth 213.55% 12.11%
10 EPS Growth 325.00% 15.57%
10 Net Income Growth 352.73% 16.30%
10 Cash Flow Growth 339.54% 15.96%
10 Dividend Growth 500.00% 19.62%
10 Stock Price Growth 325.12% 15.57%

If you had invested in this company in December 2012, for $1,006.25 you would have bought 115 shares at $8.75 per share. In December 2022, after 10 years you would have received $588.23 in dividends. The stock would be worth $4,136.55. Your total return would have been $4,724.48.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$8.75 $1,006.25 115 10 $588.23 $4,136.55 $4,724.78

If you had invested in this company in December 2002, for $1,002.38 you would have bought 405 shares now costing at $2.48 per share. In December 2022, after 20 years you would have received $1,617.98 in dividends. The stock would be worth $14,567.85. Your total return would have been $16,185.83.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$2.48 $1,002.38 405 20 $1,617.98 $14,567.85 $16,185.83

The dividend yields are low with dividend growth good. The current dividend yield is low (below 2%) at 1.88%. The 5, 10 and historical dividend yields are low at 0.98%, 1.03% and 1.13%. The dividend growth for the last 5 years is good (15% and above) at 18.13% per year. The last dividend increase was in 2022 and it was for 15.6%.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2022 is $41% with 5 year coverage at 54%. The DPR for Cash Flow per Share (CFPS) for 2022 is 26% with 5 year coverage at 31%. The DPR for Free Cash Flow (FCF) for 2022 is 38% with 5 year coverage at 40%.

Debt Ratios are good. The company currently has no Long Term Debt. The Liquidity Ratio for 2022 is good at 2.04. The Debt Ratio for 2022 is good at 3.58. The Leverage and Debt/Equity Ratios are good at 1.39 and 0.39.

The Total Return per year is shown below for years of 5 to 27 to the end of 2022. 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.
2017 5 18.13% 5.56% 3.19% 2.38%
2012 10 19.62% 17.65% 15.18% 2.46%
2007 15 20.62% 18.43% 16.27% 2.16%
2002 20 15.74% 14.32% 1.42%
1997 25 12.27% 11.31% 0.96%
1995 27 13.61% 12.66% 0.95%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 24.39, 32.85 and 40.27. The corresponding 10 year ratios are 24.94, 31.39 and 37.25. The corresponding historical ratios are 17.48, 22.80 and 29.46. The current P/E Ratio is 26.01 based on a stock price of $39.27 and EPS estimate for 2023 of $1.51. The current ratio is between the low and median ratios 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 Graham Price of $17.68. The 10-year low, median, and high median Price/Graham Price Ratios are 2.16, 2.69 and 3.27. The current ratio is 2.22 based on a stock price of $39.27. The current ratio is between the low and median ratios 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 5.17. The current ratio 4.27 based on a Book Value of $508M, Book Value per Share of $9.20 and a stock price of $39.27. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10-year median Price/Cash Flow per Share Ratio of 20.70. The current ratio is 20.66 based on Cash Flow estimate for 2023 of $105M, Cash Flow per Share of $1.90 and a stock price of $39.27. The current ratio is 0.2% 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 1.13%. The current dividend yield is 1.88% based on a stock price of $39.27 and dividends of $0.74. The current ratio is 67% 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 1.03%. The current dividend yield is 1.88% based on a stock price of $39.27 and dividends of $0.74. The current ratio is 84% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 5.18. the current P/S Ratio is 4.93 based on Revenue estimate for 2023 of $440M, Revenue per Share of $7.96 and a stock price $39.27. The current ratio is 5% 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 reasonable and maybe be cheap. The dividend yield tests both show the stock price as cheap. However, the P/S Ratio test just says it is reasonable, so this test does not confirm the dividend yield test. Most of the other tests are say the stock price is reasonable.

When I look at analysts’ recommendations, I find Buy (2) and Hold (2). The Consensus would be a Buy. The 12 month stock price consensus is $39.13. This implies a total return of 1.53%, with 1.88% from dividends and a capital loss of $0.36% based on a current stock price of $39.27.

Last year when I look at analysts’ recommendations, I found Strong Buy (1), Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus was $60.25. This implied a total return of 42.30% with 40.80% from capital gains and 1.50% from dividends based on a current stock price of $42.79. What happened was a loss of 6.73% with a capital loss of 8.23% and dividends of 1.50%. The stock price moved from $42.79 to $39.27.

Analysts on Stock Chase like this company. Stock Chase gives this stock 4 stars out of 5. It is on the Money Sense list with a C rating. Stephanie Bedard-Chateauneuf on Motley Fool looks at this stock and says why she thinks it is a buy. Christopher Liew on Motley Fool also looks at this stock and says why he thinks it is a buy.

The company put out a press release via Newswire about their 2022 results. Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street gives this stock 4 stars out of 5. It lists 2 risks of earnings are forecast to decline by an average of 2.4% per year for the next 3 years; and significant insider selling over the past 3 months.

Enghouse Systems Ltd is a Canada-based provider of software and services to a variety of end markets. The firm's operations are organized in two segments namely, the Interactive Management Group and the Asset Management Group. The firm has operations in Canada, the United States, the United Kingdom, France, Germany, Sweden, Israel, Croatia, Denmark, Norway, India, Japan, Hong Kong, Singapore, and Australia etc. Its web site is here Enghouse Systems Ltd.

The last stock I wrote about was about was Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more. The next stock I will write about will be Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more on Monday, January 30, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, January 25, 2023

Sylogist Ltd

Sound bite for Twitter and StockTwits is: Dividend Paying Tech. The problem for Debt Ratios is the awful Liquidity Ratio with other ratios fine. The Dividend Payout Ratios (DPR) are awful and they cannot afford their dividends. The dividend yields are good with dividend growth moderate. See my spreadsheet on Sylogist Ltd.

Is it a good company at a reasonable price? This is a high risk investment because it is a small company and it is Tech and it has been having some problems of late. Long Term returns have varied a lot. Betting on it might work out ok. The stock price would seem to be cheap.

I do not own this stock of Sylogist Ltd (TSX-SYZ, OTC-SYZLF). I learned about this stock from the newsletter I subscribe to.

When I was updating my spreadsheet, I noticed that the Liquidity Ratio was really low. For 2022 it is 0.56. I like this ratio to be 1.50 or higher. They have Deferred Revenue but this only get them to 0.94. They also have Credit Facilities. With both Deferred Revenue and Credit facilities the Ratio is 3.92. The problem with low Liquidity Ratios, a company can be forced into a bad situation in economic recession. In an economic recession, a company may not be able to count on Credit Facilities.

If you had invested in this company in December 2012, for $1,001.00 you would have bought 286 shares at $3.50 per share. In December 2022, after 10 years you would have received $943.80 in dividends. The stock would be worth $1,761.76. Your total return would have been $2,705.56.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$3.50 $1,001.00 286 10 $943.80 $1,761.76 $2,705.56

If you had invested in this company in December 1998 just after when it started to trade on the TSX, for $1,000.35 you would have bought 117 shares at $8.55 per share. In December 2022, after 24 years you would have received $416.40 in dividends. The stock would be worth $720.72. Your total return would have been $1,137.12.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$8.55 $1,000.35 117 24 $416.40 $720.72 $1,137.12

The dividend yields are good with dividend growth moderate. The current dividend yield is good (5% to 6% ranges) at 6.61%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 3.64%, 3.02% and 3.02%. The dividend growth over the past 5 years to the end of September 2022 financial year is moderate (8% to 14% ranges) at 12.3% per year. Unfortunately, the last change to dividends is a decrease of 20%. Therefore, if we take the growth to date it is low at 4.6% per year over the past 5 years.

The Dividend Payout Ratios (DPR) are awful and they cannot afford their dividends. The DPR for EPS for 2022 is 417% with 5 year coverage at 153%. The DPR for EPS is not expected to be under 100% within the next 3 years. The DPR for Adjusted Earnings Per Share (AEPS) for 2022 is 294% with 5 year coverage at 150%. This is also not expected to be under 100% in the next 3 years. The DPR for Cash Flow per Share (CFPS) for 2022 is 92% with 5 year coverage at 72%. This is expected to be over 100% soon and it should be at 40% or lower. The DPR for Free Cash Flow (FCF) for 2022 (by WSJ) is 101% with 5 year coverage at 76%. There is no agreement on what the FCF is.

The problem for Debt Ratios is the awful Liquidity Ratio with other ratios fine. The Long Term Debt/Market Cap Ratio is good and low at 0.17. The Liquidity Ratio is awful at 0.56 and adding in Cash Flow after dividends just moves it to 0.58. You only get a good one by considering the current debt and it reaches a good 3.26. However, low Liquidity Ratios can cause problems in bad times and in bad times you cannot always roll over your debt. The Debt Ratio is good at 1.56. The Leverage and Debt/Equity Ratios are fine at 2.80 and 1.80.

The Total Return per year is shown below for years of 5 to 24 to the end of 2022. 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.
2017 5 12.30% -4.06% -9.38% 5.32%
2012 10 15.34% 13.23% 5.82% 7.41%
2007 15 18.69% 32.28% 20.00% 12.29%
2002 20 37.09% 26.06% 11.03%
1998 24 0.75% -1.36% 2.10%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 45.25, 76.39 and 98.61. The corresponding 10 year ratios are 34.24, 47.38 and 61.77. The corresponding historical ratios are 14.63, 21.05 and 26.05. The current P/E Ratio is 43.21 based on a stock price of $6.05 and EPS estimate for 2023 of $0.14. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. Note that the ratios are very high. When EPS falls, the stock price will only fall so much because people see that the company has value.

I also have Adjusted Earnings per Share Ratios. The 5-year low, median, and high median Price/Earnings per Share Ratios are 24.55, 28.98 and 33.41. The corresponding 10 year ratios are 24.24, 30.17 and 37.33. The current P/AEPS Ratio is 31.84 based on AEPS for 2023 of $0.19 and a stock price of $6.05. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. These are also very high ratios.

I get a Graham Price of $2.33. The 10-year low, median, and high median Price/Graham Price Ratios are 2.22, 2.92 and 3.89. The current ratio is 2.60 based on a stock price of $6.05. This ratio is between the low and median ratios 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 5.15. The current P/B Ratio is 3.51 based on a stock price of $6.05, Book Value per Share of $1.73 and a Book Value of $41M. The current ratio is 32% 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 18.21. The current P/CF Ratio is 22.26 based on Cash Flow per Share estimate for 2023 of $0.27, Cash Flow of $6.5M and a stock price of $6.05. The current ratio is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 3.02%. The current dividend yield is 6.61% based on dividends of $0.40 and a stock price of $6.05. The current dividend yield is 119% above the historical median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 3.02%. The current dividend yield is 6.61% based on dividends of $0.40 and a stock price of $6.05. The current dividend yield is 119% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 7.13. The current P/S Ratio is 2.40 based on a stock price of $6.05, Revenue estimate for 2023 of $60.2M and Revenue per Share of $2.52. The current ratio is 66% 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 dividend yield tests say so and is confirmed by the P/S Ratio tests. However, there are lots of problems in testing this stock. Lots of ratios are very high, including P/E Ratios, P/B Ratios, P/CF Ratios and P/GP Ratios. The dividend yield is still quite high considering the recent cut to dividends. The clearest test is the P/S Ratio test.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $9.38. This implies a total return of $61.655 with 55.04% from capital gains and 6.61% from dividend based on a stock price of $6.05.

Opinions on this stock on Stock Chase vary a lot from Buy to Do Not Buy. Problem is the stock is illiquid. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense list. Christopher Liew on Motley Fool thinks there is a fire sale on this stock with solid organic growth. Robin Brown on Motley Fool thinks this stock is incredibly cheap. The company put out a Press Release on their 2022 results.

Simply Wall Street via Yahoo Finance says this stock is undervalue and its intrinsic value is $10.81. Simply Wall Street has 3 risk warnings of earnings are forecast to decline by an average of 155.6% per year for the next 3 years; large one-off items impacting financial results; and profit margins (5.4%) are lower than last year (11.3%).

Sylogist Ltd is a software company that provides Enterprise Resource Planning solutions, including fund accounting, grant management, and payroll to public service organizations. The only segment is Public Sector. Geographically, the company offers its services to the United States of America, Canada, and the United Kingdom region. Most of the revenue comes from the United States of America. Its web site is here Sylogist Ltd.

The last stock I wrote about was about was Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) ... learn more. The next stock I will write about will be Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more on Friday, January 27 around 5 pm. Tomorrow on my other blog I will write about Financial Psychology .... learn more on Thursday, January 25, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, January 23, 2023

Transcontinental Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. Debt Ratios are fine with a good Liquidity Ratio. The Dividend Payout Ratios (DPR) are fine. The dividend yields are good with dividend growth low. See my spreadsheet on Transcontinental Inc.

Is it a good company at a reasonable price? This stock is never going to be great stock, but it probably can produce a return of 8% per year. A bad sign is that dividends have been flat since 2020. But analysts do expect dividends to start to rise again this year so this is a good sign. They have been a dependable dividend producing stock. The price seems to be relatively cheap. There is insider buying and this is a good sign.

I own this stock of Transcontinental Inc (TSX-TCL.A, OTC-TCLAF). This has been a dividend growth stock and will probably be that again. It was on several dividend lists. However, it fell on hard times after 2008, but currently seems to be recovering. It is was on the Canadian Dividend Aristocrats Index when I bought it in 2015.

I plan to hold on to the stock that I have. I have not made much , a total return of 5.12% per year over the past 8 years. However, my purchases were in the $15 range and I think it will go higher.

When I was updating my spreadsheet, I noticed that Revenue came in higher than expected. Analysts expected an 3.2% increase, but Revenue increased 11.8%. However, Adjusted Net Earnings was expected to fall 2%, but fell 7.6%. It was expected at $2.32 and came in at $2.19.

I noticed also that analysts expected this company to restart raising their dividends in 2022, from $0.90 to $0.97 and continue to raise them in the following years. This did not happen. Now analysts are expecting the dividends to go to $0.91 in 2023 and $0.96 in 2024.

There is some insider buying. The CFO increased his shares by 57%, from 16,050 to 25,250 shares. Another officer increased her shares by 11% from 16,000 to 20,000. There is a fair amount of insider ownership by the Marcoux family, with say, Remi Marcoux owning some 12,562,840 Class B shares.

If you had invested in this company in December 2012, for $1,003.50 you would have bought 90 shares at $11.15 per share. In December 2022, after 10 years you would have received $790.20 in dividends. The stock would be worth $1,375.20. Your total return would have been $2,165.40. As the chart below shows, the 10 year total return if 10.32% with 3.20% from capital gains and 7.12% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$11.15 $1,003.50 90 10 $790.20 $1,375.20 $2,165.40

The dividend yields are good with dividend growth low. The current dividend yields are good (5% to 6% ranges) at 5.91%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 4.86% and 4.22%. The historical dividend yield is low (below 2%) at 1.70%. They have been paying dividends for 29 years and dividends were below 2% prior to 2009. The dividends have increase at a low level over the past 5 years at 2.8% per year. However, the last dividend increase was in 2020. Analysts are expecting dividend increase in the future.

The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for EPS is 55% with 5 year coverage at 48%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 41% with 5 year coverage at 35%. The DPR for Cash Flow per Share (CFPS) for 2022 is 18% with 5 year coverage at 17%. The DPR for Free Cash Flow (FCF) for 100% with 5 year coverage at 34%.

Debt Ratios are fine with a good Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2022 is 0.73 and this is fine. The Liquidity Ratio for 2022 is good at 2.07. The Debt Ratio for 2022 is good at 1.98. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.02 and 1.02. They would be good if below 2.00 and 1.00, so they are close.

The Total Return per year is shown below for years of 5 to 34 to the end of 2022. 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.
2017 5 2.77% -4.95% -9.26% 4.31%
2012 10 4.67% 10.32% 3.20% 7.12%
2007 15 3.02% 4.24% -0.20% 4.43%
2002 20 10.60% 2.32% -0.95% 3.27%
1997 25 11.44% 7.66% 3.72% 3.94%
1992 30 9.21% 7.84% 4.29% 3.54%
1988 34 9.45% 5.90% 3.55%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.06, 9.43 and 11.82. The corresponding 10 year ratios are 7.55, 9.08 and 11.00. The corresponding historical ratios are 10.21, 12.74 and 14.74. The current P/E Ratio is 9.58 based on a stock price of $15.23 and EPS estimate for 2023 of $1.59. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.57, 7.51 and 8.91. The corresponding 10 year ratios are 6.29, 7.40 and 8.58. The current P/AEPS Ratio is 7.12 based on a stock price of $15.23 and AEPS estimate for 2023 of $2.14. The current ratio is between the low and median ratios 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 Graham Price of $32.29. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.65 and 0.77. The current P/GP Ratio is 0.47 based on a stock price of $15.23. 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 1.35. The current ratio is 0.70 based on a stock price of $15.23, Book Value of $1,876M and Book Value per Share of $21.66. The current ratio is 48% 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 2023. That estimate is $22.30 and would produced a ratio of 0.68 based on a stock price of $15.23 and a Book Value of $1,932M. This ratio is 50% 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 5.03. The current P/CF Ratio is 3.13 based on Cash Flow per Share estimate of $4.87, Cash Flow of $422M and a stock price of $15.23. The current ratio is 38% 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 1.70%. The current dividend yield is 5.91% based on dividends of $0.90 and a stock price of $15.23. The current yield is 248% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 4.22%. The current dividend yield is 5.91% based on dividends of $0.90 and a stock price of $15.23. The current yield is 40% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 0.63. The current ratio is 0.44 based on Revenue estimate for 2023 of $3,032M, Revenue per Share of $35.00 and a stock price of $15.23. The current ratio is 31% 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 10 year dividend yield test is showing this and it is confirmed by the P/S Ratio test. Most of the other tests are showing the same thing.

When I look at analysts’ recommendations, I find Buy (3) and Hold (3) recommendations. The consensus would be a Buy. The 12 month stock price of $21.50. This implies a total return of $47.08% with 41.17% from capital gains and 5.91% from dividends based on a current stock price of $15.23.

Last year when I look at analysts’ recommendations, I found Strong Buy (1), Buy (3) and Hold (2). The consensus would be a Buy. The 12 month stock price was $26.50. This implied a total return of 37.14% with 32.63% from capital gains and 4.50% from dividends based on a stock price of $19.98. What happened was a drop in price to $15.23 and a loss of 19.27% with a capital loss of 23.77% and dividends of 4.50%. This is the second year in a row that analysts expected a strong price rise. Perhaps this year it will happen.

The last recommendation is a sell on Stock Chase because the analyst think there are better stocks to buy. Some analysts like this stock and some do not. Stock Chase gives this stock 3 stars out of 5. It is on the Money Sense list for 2022 with an A rating. Jitendra Parashar on Motley Fool thinks this stock is a current buy. Christopher Liew on Motley Fool also thinks this stock is a buy. The company put out a press release via Globe Newswire on their results for 2022.

A Simply Wall Street report on Yahoo Finance in January 2023 suggest that this stock is still a buy. Simply Wall Street gives this stock 4 stars out of 5. They also give 3 warnings of has a high level of debt; dividend of 5.91% is not well covered; and significant insider selling over the past 3 months. It looks more to me that insiders are not picking up stock options rather than selling stock.

Transcontinental Inc or TC Transcontinental, is a Canadian printer and flexible packaging provider that operates in three segments: packaging, printing, and other. Its packaging segment features the production of different plastic products geared toward consumer goods. Its web site is here Transcontinental Inc.

The last stock I wrote about was about was Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more. The next stock I will write about will be Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more on Wednesday, January 24, 2023 around 5 pm. Tomorrow on my other blog I will write about Quarterhill Inc .... learn more on Tuesday, January 24, 2023 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, January 20, 2023

Canadian Imperial Bank of Commerce

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. Results of stock price testing is that the stock price is reasonable and may even be cheap. Debt Ratios are fine. The Dividend Payout Ratios (DPR) are fine based on the DPR for AEPS. The dividend yields are good with dividend growth low. See my spreadsheet on Canadian Imperial Bank of Commerce.

Is it a good company at a reasonable price? This bank has been producing reasonable profits for its shareholders over the long term. If you like this bank, now is the time to buy when it is cheap. It may take awhile to cover, but you cannot beat getting a bank cheap. The stock price is certainly reasonable and maybe even cheap as shown by several stock price tests, including the dividend yield tests.

I do not own this stock of Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM). This was the only major Canadian Bank I was not following. I think it is about time I did, so I started to follow this bank in 2017.

When I was updating my spreadsheet, I noticed that the stock price fell a lot last year and it has not really recovered. The stock price fell 25.7% in 2022 and it is only up by 6.8% to date this year. Stock price was $73.73 in December 2021, $54.77 in December 2022 and it now $58.50. Also note that the stock was split 2 to 1 in May of 2022.

If you had invested in this company in December 2012, for $1,039.61 you would have bought 26 shares at $39.99 per share. In December 2022, after 10 years you would have received $663.00 in dividends. The stock would be worth $1,521.00. Your total return would have been $2,184.00.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$39.99 $1,039.61 26 10 $663.00 $1,521.00 $2,184.00

If you had invested in this company in December 1988, for $1,078.11 you would have now 162 shares at costing $6.19 per share. In December 2022, after 33 years you would have received $7,634.25 in dividends. The stock would be worth $9,477.00. Your total return would have been $17,111.25.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$6.19 $1,078.11 162 33 $7,634.25 $9,477.00 $17,111.25

The dividend yields are good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 5.81%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.66%, 4.66% and 4.59%. The dividend growth is low (below 8% per year) at 5.3% per year over the past 5 years. There was no time period when the growth was higher than 8%. The last dividend increase was in 2022 and it was for 2.4%. However, this bank tends to increase the dividends more than once a year.

The Dividend Payout Ratios (DPR) are fine based on the DPR for AEPS. The DPR for EPS for 2022 is 49% with 5 year coverage at 50%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 47% with 5 year coverage at 48%. The DPR for Cash Flow per Share (CFPS) is 49% with 5 year coverage at 43%. The DPR for Free Cash Flow for 2022 is 14% with 5 year coverage at 12%. There is no consensus on what the FCF is. The important ratio is for AEPS.

Debt Ratios are fine. Since this is a bank, I am looking at Long Term Debt/Covering Assets Ratio and for 2022 it is good at 0.84. I calculate a Liquidity Ratio for 2022 of 5.81, but for banks this is not an important ratio. The Debt Ratio for 2022 is 1.06 and this is fine for banks.

The Total Return per year is shown below for years of 5 to 39 to the end of 2021. 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.
2017 5 5.31% 2.74% -2.22% 4.96%
2012 10 6.10% 8.61% 3.20% 5.41%
2007 15 5.12% 8.06% 2.98% 5.08%
2002 20 7.33% 10.52% 4.85% 5.67%
1997 25 7.62% 8.02% 3.66% 4.36%
1992 30 7.97% 13.70% 7.26% 6.44%
1987 35 7.24% 11.86% 6.46% 5.39%
1983 39 6.72% 13.11% 7.04% 6.07%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.23, 10.08 and 10.87. The corresponding 10 year ratios are 8.46, 9.98 and 10.82. The corresponding historical ratios are 8.09, 9.72 and 10.96. They are consistent. The current P/E Ratio is 9.08 based on a stock price of $58.50 and EPS estimate for 2023 of $6.44. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.97, 9.45 and 10.47. The corresponding 10 year ratios are 8.19, 9.43 and 10.63. The current P/AEPS Ratio is 8.57 based on a stock price of $58.50 and AEPS estimate for 2023 of $6.83. The current ratio is between the low and median ratios 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 Graham Price of $87.53. The 10-year low, median, and high median Price/Graham Price Ratios are 0.69, 0.81 and 0.92. The current P/GP Ratio is 0.67 based on a stock price of $58.50. The current ratio is below the low of the 10 year median ratio. 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 1.56. The current P/B Ratio is 1.17 based on a Book Value of $45,258M, Book Value per Share of $49.86 and stock price of $58.50. The current P/B Ratio is 25% 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 2023 and it is $54.00. This gives a ratio of 1.08 and book Value of $49, 021M based on a stock price of $58.50. This ratio is 30% 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 2.60. The current P/CF Ratio is 2.34 based on last 12 month Cash Flow of $422,715M, Cash Flow per Share of $25.02 and a stock price of $58.50. The current ratio is 10% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, Cash Flow is not considered very important for banks.

I get an historical median dividend yield of 4.59%. The current dividend yield is 5.81% based on dividends of $3.40 and a stock price of $58.50. The current yield is 27% 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 4.66%. The current dividend yield is 5.81% based on dividends of $3.40 and a stock price of $58.50. The current yield is 25% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 2.76. The current ratio is 2.29 based on Revenue estimate for 2023 of $23,235M, Revenue per Share of $25.60 and a stock price of $58.50. The current ratio is 17% 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 reasonable and may even be cheap. Both the dividend yield tests are pointing to cheap. The P/S Ratio is showing reasonable, but the ratio is 17% below the 10 year median. Other tests are also pointing to a cheap price.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), Hold (12), Underperform (1), and Sell (1). The current consensus is a Hold, but the recommendations are all over the place. The 12 month stock price consensus is $64.70. This implies a total return of 16.41% with 10.60% from capital gains and 5.81% from dividends based on a stock price of $58.50.

Last year, when I look at analysts’ recommendations, I find Strong Buy (5), Buy (6) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $82.72. This implies a total return of 7.41% with 4.02% from dividends and 3.39% from capital gains based on a stock price of $80.01. What happened was a price change to $58.50 with a total loss of 22.86% with a capital loss of 26.88 and dividends of $4.02. (Prices are changed to account for the 2 for 1 stock split.

This site of Stock Chase gives this stock 5 stars out of 5. Most analysts on this site do not like this bank and think you are better off with other Canadian Banks. It is on the Money Sense list with a B rating. Amy Legate-Wolfe on Motley Fool thinks you should buy this bank as it has fallen the most. Andrew Walker on Motley Fool thinks that this bank is a good buy at its current price and yield. This bank put out a press release via Newswire on their results for 2022. Simply Wall Street via Yahoo Finance reviews this stock and they do not seem to like it much. Simply Wall Street rate this bank with 4 stars out of 5. They list no risk. Their negativity on this stock and the star ratings do not seem to match up.

Canadian Imperial Bank of Commerce is Canada's fifth-largest bank, operating three business segments: retail and business banking, wealth management, and capital markets. It serves approximately 11 million personal banking and business customers, primarily in Canada. Its web site is here Canadian Imperial Bank of Commerce.

The last stock I wrote about was about was National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more. The next stock I will write about will be Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) ... learn more on Monday, January 23, 2023 around 5 pm.

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