Wednesday, August 15, 2012


On my other blog are some comments on "Inequality". See comments blog.

I own this stock of TECSYS Inc. (TSX-TCS). I came across it last year when I was looking for a dividend paying small cap stock. Since I bought this stock I have made a return of 12.97% per year with 3.42% per year coming from dividends. The capital gain portion is 9.55% per year.

When I look at insider trading, I find a small amount of insider buying and no insider selling. There are options outstanding. The company is buying back shares to cancel. I like strong insider ownership.

There are only 2 institutions that hold some 24% of the outstanding shares. They have decreased their holdings by 3.6% over the past 3 months. This is a negative. Gestion de portefeuille Natcan Inc. a Subsidiary of the National Bank used to hold 1.9M shares ceased to be an insider on 4 April 2012, although National Bank is still one of their bankers.

I get 5 year low, median and high Price/Earnings Ratios of 13.00, 15.21and 17.08. On a stock price of $2.19, I get a P/E ratio of 12.17. This would suggest that the stock price is quite good.

I get a Graham price of $2.33. The 10 year low, median and high Price/Graham Price Ratios are 0.81, 1.03 and 1.30. The current P/GP ratios of 0.94 would suggest a good stock price. On an absolute basis a good stock price is also one at or below the Graham Price.

I get a 10 year median Price/Book Value Ratio of 1.54. The current P/B Ratio of 1.63 is some 6% higher. This higher current P/B Ratio says that the stock price is reasonable (rather than good).

The current dividend yield is 2.74% and the 4 year median dividend yield is 2.76%, one that is a bit higher. The current slightly higher dividend yield also suggests a reasonable stock price.

Since my stock price tests do not come up with the same answer, I would go with the last two and say that the stock price seems reasonable. The first two tests depend partly on estimates and estimates can be high.

I can only find 1 analyst that is following this stock and his recommendation is a Strong Buy. The 12 month consensus stock price is $3.75. This implies a 73.97% total return over the next 12 months with some 71.23% coming from capital gains and 2.74% from dividends. There is only one analyst on this stock and I personally do not count on such increase in this stock.

Here is an article in Material Handling Industry of America on this company. There is also an article by TECSYS at Panorama Consulting Solutions.

I would not give the stock a Strong Buy, but a Buy. This is because I think that the stock price is a reasonable, not a good one. I would only give a Strong Buy to a stock that I liked that had a really good stock price.

TECSYS Inc. is a supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include about 600 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, third-party logistics, and general wholesale high- volume distribution industries. Its web site is here TECSYS. See my spreadsheet at tcs.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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