Matrikon Inc 2

I am continuing my review of this stock (TSX-MTK) from yesterday. It is one of the ones for which I had done a spreadsheet when I wanted a small cap for the TFSA account. It is the one I ended up buying. So, far I have lost some $10.00 on this stock since I bought it mid January. This comes to an annualized loss of 4.25%. This company, like Pulse Seismic (TSX-PSD) has suspended their dividends. The other small cap of McCoy Corp (TSX- MCB), so far, has only reduced their dividends. All three companies are feeling the pain of the current recession.

Yesterday, I put up my spreadsheet that includes the 3rd quarterly report of May 2009. The annual report on this stock is dated in August each year. In looking at what different sites say about the P/E on this stock, I find they range from 6 to 13. What I get is around 7, with a forward P/E around 8. I get a 5 year average P/E on the closing price of 25 and a 5 year average P/E on the Low Price of 16.4.

So, the P/E that I calculate shows that the current price is relatively, good. My trailing P/E is even lower at 6.3 and 7 for 2009 and 2010. However, do not forget that the P/E is based on earnings estimates and the trailing P/E is based on actual earnings for 2009. The current Price/Book Value is only 40% of the 10 year average, so this points to a good current stock price. Also, the Graham Price for 2009 is some 30% higher than the current stock price. This also points to a good stock price.

However, if you look at the Price/Sales ratio, the one for 2008 is 1.90. The 5 and 10 year averages are 1.65 and 1.31 respectively. So, this shows that the current price is high. As with most ratios, the lower the ratio, the better the stock price. The other negative ratio is the Accrual Ratio and at over 10%, this points to sell a recommendation rather than a buy recommendation. The other problem with the Accrual Ratio is that net income is positive and Cash from Operations is negative. When cash from operations is negative, this is never good.

When I look at the analysts’ recommendations, what I see are calls from Strong Buys to Holds, with the consensus recommendation being a buy. (See my site for information on analyst ratings.) What probably is the best recommendation is the insider buying. There are all types of insider buying over the last year, so it is broadly based with CEO, CFO, officers and directors all buying and increasing their stake in this company. Currently, I will continue to hold my shares.

Matrikon Inc. is engaged in the sale of software and information technology professional services to industrial facilities. Its web site is www.matrikon.com. See my spreadsheet at www.spbrunner.com/stocks/mtk.htm.

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. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.