TECSYS Inc

On my other blog I am today writing about pension woes...continue...

I own this stock of TECSYS Inc. (TSX-TCS, OTC-TCYSF). I came across this stock when I was looking for a dividend paying small cap stock as a filler stock. I consider a filler stock to be one to soak up small amounts of investment money that I have. However, in the end I did not buy it was a filler stock, I bought it for my trading accounting as a small cap dividend paying growth stock.

This company started to pay dividends in 2008. The dividends have been increased each financial year since with the growth of dividends at 11.8% per year. Dividends are only paid twice a year (rather than the normal quarterly payment). The last dividend raise was for the fiscal year ending in April 2013 and was a 16.7% rise.

The current dividend yield is a moderate one, with the current dividend yield at 1.75%, but the 5 year median is higher at 2.7%. However, there seems no reason not to expect another dividend raise this year. If dividends are increased by 10%, the current yield would be 1.91% and if they are increased at 16.7% again as they were last year that would make the current yield 2.02%.

The Dividend Payout Ratios are good with the 5 year median at 46% for earnings and 27% for cash flow. The DPRs are expected to be around the same or better for the current financial year.

Total return for the last 5 and 10 years is at 16.23% and 11.35% per year with 13.89% and 10.21% from capital gains and 2.34% and 1.14% from dividends. My return, since I bought this stock in February 2011 is 38.13% per year with 34.74% from capital gains and 3.39% from dividends.

The outstanding shares have declined over the past 5 and 10 years at 2.5% and 2.3% per year. Shares have increased due to stock options and decreased due to buy backs. Growth has been better over the past 10 year than the past 5 years. However, the only analyst following this stock expects good growth for this financial year.

Revenue has grown at 2.4% and 11% per year over the past 5 and 10 years. Revenue per Share has grown at 5% and 14% per year over the past 5 and 10 years. If you look at Revenue per Share growth over the past 5 and 10 years using 5 year running averages, the growth is different at 9% and 6.6% per year.

Before 2008, this company only had one year of positive earnings. If you look at 5 year growth in earnings they are down some 2.3% per year. If you use 5 year running averages, earnings are up over the past 5 years at 95% per year. The company's earnings decreased over the last two years, but are expected to be up substantially over the next couple of years.

Before 2004, the company also had problems with negative cash flows. Also, 5 years ago was a very good year for cash flow and they were higher than for the past few years. However, if you look at a5 year running averages over the past 5 years, you get growth in cash flow of around 17% per year.

One thing that is not good is the Return on Equity. This ratio is not very good coming in at just 5.8% for the last fiscal year and has a 5 year median of just 8.5%. The ROE on comprehensive income is the same as for the ROE on net income. The thing is that companies with low ROEs tend to, over the longer term, underperform the market.

The debt ratios are good for this company. The current Liquidity Ratio is quite good at 1.60. However, the 5 year median is lower at 1.45 and not quite to the 1.50 ratio I like. The Debt Ratio is very good at 1.90 and the 5 year median ratio is even better at 2.11. The current Leverage and Debt/Equity Ratios are fine and are at 2.11 and 1.11, respectively.

I have not invested much in this stock, but I have been pleased with the results I have had. This is a rather risky stock and I bought it to tuck it away for a while and see how it does. I have not bought more as I think that it is getting expensive. However, I am sure that they will be times when it is a good buy again as we are still in a secular bear market. See my spreadsheet at tcs.htm.

This is the first of two parts. Second part will be posted on Tuesday, August 13th, 2013 and will be here.

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.

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.