Tuesday, January 3, 2012

Calian Technologies Ltd

I own this stock (TSX-CTY). This is the stock I am buying with my TFSA money this year. This is a small tech stock, so it is riskier than a lot of dividend paying stocks that I own. This stock has very good dividends. The 5 year median dividend yield is 4.42%. The current dividend yield is 5.96%.

They have only been paying dividends for 8 years, but the increase to in dividends over this period is 24% per year. The 5 year dividend increase is also 24% per year. They often raise the dividends more than once in a financial period which ends at September 30th each year. For the financial period that will end September 30, 2012, they have already raised the dividends 4%.

Their dividend payout ratios are good. The 5 year median DPR for earnings is 42.5% and for cash flow is 36.3%. However, the DPR ratios for the financial year ending in September 2011, the DPR for earnings was higher at 56.7% and the DPR for CF was 51.3%. This are still good rates.

Total return over the past 5 and 10 years has been great. The total return for the last 5 and 10 years is 16.5% per year and 30% per year, respectively. The portion of this total return attributable to dividends is 6% and 6.7%, respectively. This means that 37% and 22%, respectively, of its total return is attributable to dividends. However, do not forget that future returns may not be as good as past returns.

The worse growth for this company is revenues per share. This has only grown at the rate of 6.3% and 9% per year over the past 5 and 10 years. Earnings are better with growth at 17% per year over the past 5 and 9 years. My longer term earnings are just for 9 years as this company lost money in 2001. This is not surprising as a lot of tech companies had problems in 2000 and 2001.

The growth in cash flow is not bad with the 5 and 9 year growth rate at 14% and 8.8% per year, respectively. (They also had negative cash flow in 2001, so my longer term period is 9 years.) Growth is also good for Book Value with growth for the last 5 and 10 years at 8.7% and 11% per year, respectively.

Return on Equity has generally been quite good. The ROE for the financial year ending in September 2011 is 20.9%. The 5 year median ROE is the same at 20.9%. The ROE based on Comprehensive Income is slightly lower at 18.9% at the end of September 2011. The 5 year median for this ROE is 19.8%. For further information on comprehensive income and it uses, see Wikipedia.

The last thing to talk about today is debt ratios. Debt Ratios are very good on this stock. The current Liquidity Ratio is 2.77. The current Asset/Liability Ratio is 3.27. For these ratios, anything at 1.50 and better is considered good. The current Leverage and Debt/Equity Ratios are correspondingly low (and therefore good) at 1.44 and 0.44 respectively.

There is one negative remark that I like to say and that is I think that they give a lot of stock options out. Also they have an employee stock purchase plan. Under the stock option plan, they issued ¼ of 1% of the outstanding shares this year. Under the stock option plan, they issued 1% of the outstanding shares last year. The number of shares outstanding went down both years as the company purchased shares on the open market. On the other hand, the CEO owns more than $1M in shares in this company.

Tomorrow, I will continue talking about this company, mostly in connection with the current stock price, but also what analysts say about it.

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. Its web site is here Calian. See my spreadsheet at cty.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 for stocks followed and investment notes. Follow me on twitter.

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