Matrikon Inc

Now back to the small cap stocks that I looked at in the early part of this year. I was looking for one to soak up the remaining cash in my TFSA after buying Shoppers Drug Mart for this account. This stock (TSX-MTK) is one of the ones for which I had done a spreadsheet and it is the one I ended up buying.

The first thing I would like to talk about is dividends. 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.

This first thing to look at is the growth figures. For things like Revenue, Earnings, Stock Price, Book Value and Cash Flow, the 5 year and 10 year figures for this stock are good. The one caution is that when you look at Revenue per share, the 5 year figures are not great at 5% increase per year. The last thing to mention is that there is no growth in dividends. This company only started to pay dividends in 2008. For the 4th quarter of this year, they have suspended dividends.

The next thing to look at is the Asset/Liability Ratios. For the Liquidity Ratio and the Asset/Liability Ratio we have ratios way above 1.50. The current ratios are a bit below the long term ratios, but they are both still very good.

The last thing I want to mention if the Return on Equity (ROE). This ratio has varied greatly on this stock. To August 2008, the last annual report date, this ratio looked good with a 5 year running average of 10.3%. But this figure hides the wide variation it has. For example, the ROE for 2007 was -5% and the ROE for 2008 was 20.1%. The interim one for the 3rd quarter ending in May 2009 is just 5.7%.

There are some great things about this stock and some things that say caution. Most of the growth figures and ratios are good, but there are some problems. The most notable thing on this stock is the insider buying. Tomorrow, I will look at what the analysts are saying about this stock. As it is a small cap, there will not be many analysts following this stock.

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.