Is it a good company at a reasonable price? This company hit of stock price of $66.11 in 2020 and it has been declining since and now is down some 72%. The thing is that as a Tech stock, this stock used to have high ratios. The stock ratios have fallen a lot further than say Revenue, Earnings and Cash Flow. Analyst expect the company to do better in 2026, but I do understand their Hold rating. Google AI says a post-pandemic slump in demand for its video/remote work tools is one reason for the recent decline. That is interesting. The stock price is cheap, but just because a stock is cheap does not make it a good buy.
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.
When I was updating my spreadsheet, I noticed Revenue has gone down in 2025 as well as earnings. I see expenses of Direct Costs and Operation Expenses ratio is up. The 10 year expense ratio median is 0.72 and 5 year median is 0.73. In 2025 that ratio is 0.77. I also noticed that the Revenue estimates are lower than last year. Last year the estimates for 2026 and 2027 were $561M and $600M. This year, the Revenue estimates for 2026 and 2027 are $506M and $538M.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2025 and expected growth over this year. You can see that 5 year growth is down except for dividends.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | -0.97% | -0.20% | 0.14% | <-12 mths |
| 5 | EPS Growth | -24.29% | -5.41% | -2.24% | <-12 mths |
| 5 | Net Income Growth | -25.28% | -5.66% | -0.27% | <-12 mths |
| 5 | Cash Flow Growth | -21.45% | -4.71% | ||
| 5 | Dividend Growth | 128.57% | 17.98% | 7.14% | <-12 mths |
| 5 | Stock Price Growth | -68.52% | -20.64% | -10.57% | <-12 mths |
| 10 | Revenue Growth | 78.61% | 5.97% | 1.43% | <-this year |
| 10 | EPS Growth | 129.06% | 8.64% | 12.54% | <-this year |
| 10 | Net Income Growth | 134.38% | 8.89% | 15.15% | <-this year |
| 10 | Cash Flow Growth | 161.58% | 10.09% | ||
| 10 | Dividend Growth | 409.09% | 17.67% | 10.71% | <-this year |
| 10 | Stock Price Growth | -43.27% | -5.51% | 54.97% | <-this year |
If you had invested in this company in December 2015, for $1,003.59 you would have bought 27 shares at $37.17 per share. In December 2025, after 10 years you would have received $201.42 in dividends. The stock would be worth $549.72. Your total return would have been $751.14 per year. This would be a total loss of 3.11% per year with 5.84% from capital loss and 2.73% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.17 | $1,003.59 | 27 | 10 | $201.42 | $549.72 | $751.14 |
The current dividend yield is good with dividend growth good. The current dividend yield is good (5% to 6% ranges) at 6.18%. The 5, 10 and historical dividend yields are low (below 2%) at 1.89, 1.10% and 1.36%. The dividend increases are good (above 15% per year) at 18% per year over the past 5 years. Note that the low dividend yield is more typical of a Tech stock than the present good dividend yield.
The Dividend Payout Ratios (DPR) are generally too high. The DPR for 2025 for Earnings per Share (EPS) is far too high at 84% with 5 year coverage at 76%. The DPR for 2025 for Cash Flow per Share (CFPS) is fine at 39% with 5 year coverage at 41%. The DPR for 2025 for Free Cash Flow (FCF) is too high at 60% with 5 year coverage at 56%. This is a tech stock and their DPRs were better for a Tech stock in the 30% range. There is a trade off between using money for dividends and reinvesting in the company. That is why too high a percentage of earnings going to dividends rather than reinvesting in the company is not good.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 83.58% | 75.80% |
| CFPS | 39.08% | 41.10% |
| FCF | 59.92% | 55.54% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2025 is good at 0.00 and currently at 0.00. The total long term debt to Market Cap ratio is good at 0.03 and 0.03 currently. The Liquidity Ratio for 2025 is good at 1.71 and 1.71 currently. The Debt Ratio for 2025 is good at 3.46 and 3.46 currently. The Leverage and Debt/Equity Ratios for 2025 are good at 1.41 and 0.41 and currently at 1.41 and 0.41.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.00 | 0.00 |
| T. Lg Term R | 0.03 | 0.03 |
| Intang/GW | 0.38 | 0.41 |
| Liquidity | 1.71 | 1.71 |
| Liq. + CF | 2.04 | 2.02 |
| Debt Ratio | 3.46 | 3.46 |
| Leverage | 1.41 | 1.41 |
| D/E Ratio | 0.41 | 0.41 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2025. 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. |
|---|---|---|---|---|---|
| 2020 | 5 | 17.98% | -17.05% | -19.87% | 2.83% |
| 2015 | 10 | 17.67% | -3.11% | -5.84% | 2.73% |
| 2010 | 15 | 20.30% | 15.60% | 11.01% | 4.59% |
| 2005 | 20 | 20.07% | 11.47% | 8.47% | 3.00% |
| 2000 | 25 | 11.26% | 8.88% | 2.38% | |
| 1995 | 30 | 11.21% | 9.23% | 1.98% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 18.60, 20.05 and 24.33. The corresponding 10 year ratios are 22.86, 31.37 and 37.20. The corresponding historical ratios are 17.72, 22.48 and 28.52. The current ratio is 12.34 based on a stock price of $18.61 and EPS estimate for 2025 of $1.51. This ratio is low and below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $19.43. The 10-year low, median, and high median Price/Graham Price Ratios are 2.05, 2.53 and 3.23. The current ratio is 0.96 based on a stock price of $18.61. 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 4.87. The current P/B Ratio is 1.67 based on a Book Value of $609.5M, Book Value per of 11.13 and a stock price of $18.61. The current ratio is 66% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Book Value per Share estimate for 2026 of $11.22. This implies a ratio of 1.66 based on a stock price of $18.61 and a Book Value of $614.3M. This ratio is 66% 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 19.92. The current ratio is 7.72 based on Cash Flow of $132M for the last 12 months, Cash Flow per Share of $2.41 and a stock price of $18.61. The current ratio is 61% 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 1.35%. The current dividend yield is 6.45% based on dividends of $1.20 and a stock price of $18.61. The current dividend yield is 324% 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 1.10%. The current dividend yield is 6.45% based on dividends of $1.20 and a stock price of $18.61. The current dividend yield is 485% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 5.29. The current ratio is 2.01 based on Revenue estimate for 2026 of $506M, Revenue per Share of $9.24 and a stock price of $18.61. The current ratio is 62% 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 testing as relatively cheap. The dividend yield tests say this and it is confirmed by the P/S Ratio test. Also, all the other tests say the same thing.
When I look at analysts’ recommendations, I find only Hold (4). The consensus is a Hold. The 12 month stock price consensus is $22.00 with a high of $24.00 and a low of $20.00. The consensus stock price of $22.00 implies a total return of $24.66% with 18.22% from capital gains and 6.45% from dividends based on a current stock price of $18.61.
All the recommendations in 2025 on Stock Chase are Sell or Do Not Buy. One sell said that Software companies being taken over by AI and it will be a challenge to grow business going forward. Aditya Raghunath on Motley Fool says to buy as the stock is down 75% from its high and has a good dividend. Amy Legate-Wolfe on Motley Fool says that Enghouse Systems is one of Canada’s quietest long-term tech compounders, building its business through disciplined acquisitions and steady recurring revenue. The company put out a press release via Newswire about their fourth quarter results for 2025.
Simply Wall Street via Yahoo Finance reviews this stock. It does not like the fact that earnings are declining and that they are paying too much of earnings in dividends.
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 (IMG) and the Asset Management Group (AMG). The firm has operations in Canada, the United States, the United Kingdom, Europe, excluding Scandinavia, Germany, Asia-Pacific, and other regions, with maximum revenue from the USA. Its web site is here Enghouse Systems 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 Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Wednesday, January 28, 2026 around 5 pm. Tomorrow on my other blog I will write about My Investing .... learn more on Tuesday, January 27, 2026 around 5 pm.
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