Exco Technologies Ltd

I do not own this stock of Exco Technologies(TSX-XTC). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past. One first thing I liked about this stock is that I had no trouble finding their financial statements and their site had statements going back to 1997.

I generally do like it when a company continues to pay dividends when not earning any money. They did not earn money in 2006, then in 2008 and 2009. However, they said they continued with the dividends as they had enough cash flow to pay them. They were right on this as the 5 year median Dividend Payout Ratios for Cash Flow is just 20% and the for Adjusted Cash flow is 17%.

Dividend is a decent 2.4% and the 5 year medina dividend is at 2.8%. The dividends have grown over the past 5 and 8 years at 16% and 9.7% per year, respectively. Dividends were started in 2003.

As far as total return is concerned, investors have not made any. In fact, stock is really back to where it was in 1997, some 15 years ago. (Although there have been stocks splits in the past.) The only change is that dividends are now being paid, as dividend payments started in 2003. (Even with dividends, the investors in this stock are just about breaking even after 5 and 10 years.

The change in outstanding shares over the past 5 years is that they are down 0.28% and over the past 10 years they are up 0.42%. These are nominal changes and mostly the changes are for issuance of shares under Employee Stock Purchase Plan and for Stock Option Plan. They have also purchased and cancel shares.

There is not much in the way of growth in revenue, with revenue down 1.1% over the past 5 years and up 0.8% over the past 10 years. The revenue per share is down 0.8% over the past 5 years and up 0.4% over the past 10 years.

There is some growth in Earnings per Share with 5 year growth in EPS at 4.9% per year and 10 year growth at 2.7% per year. There were three years in the past 5 years where there were earnings losses. Cash flow growth is a bit mixed with 5 year growth at 2.5% per year and over the past 10 years cash flow has declined by 2.5%. However, cash flow has always been positive.

Book value growth has not been good either. Book value has declined by 2.5% per year over the past 5 years. (This would be mainly because of earnings losses.) Book Value has increased over the past 10 years by 1% per year.

The return on equity for the year ending September 2011 was good at 11.3%. However, 5 year median ROE is just 2.1% for the financial year ending in September 2011. (There were losses during the past 5 years.) The ROE for the last 12 months is a bit better at 14%. The ROE on comprehensive income for the year ending September 2011 is 12.1%. This has a 5 year median value of -1.7% as there were years of comprehensive losses within the past 5 years.

The Liquidity Ratio has always been quite good and the one for the financial year ending in September 2011 was at 3.31. The current Liquidity Ratio is also quite good at 3.69. The Debt Ratio is also very good with the current one at 5.37. The current Leverage and Debt/Equity Ratios are also quite good at 1.23 and 0.23.

This stock is a bit of a disappointment to me. I know that they are in the auto industry and probably have done well considering what other such companies in this industry have done. However Keystone's stocks have generally been quite profitable companies to invest in and this company just isn't profitable for current shareholders.

What Keystone said they liked was that they felt that the company has a great future ahead. They also liked the dividend with nice increases, the Dividend Payout Ratio for cash flow and that management and insiders owned 35% of the company. I discussed the dividends above and insiders do own at least 35% of this company.

Exco is a global designer, developer and manufacturer of dies, moulds, equipment, components and assemblies to the die-cast, extrusion and automotive industries. The Die Casting and Extrusion Technology groups operations are based in Canada, U.S., Mexico and Colombia and primarily serve automotive and industrial markets throughout the world. The Automotive Solutions Group has facilities are located in Canada, U.S., Mexico and Morocco and supply the North American, European and Asian markets. Its web site is here Exco. See my spreadsheet at xtc.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 or StockTwits.