Tuesday, January 7, 2014

Calian Technologies Ltd. 2

I own this stock of Calian Technologies Ltd. (TSX-CTY, OTC-CLNFF). This is an interesting small cap company with a very nice dividend. This stock came up on a Globe Investor site. The Globe Investor Number Cruncher is an investment column about screening for stocks and funds. They did one on companies with little to no debt. I also noted that the Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list.

When I look at insider trading, I find $0.4M of insider selling and $0.4M of net insider selling. There is a tiny bit of insider buying. Both the CEO and CFO have sold shares over the past year. When I last reviewed this stock the CEO had shares worth around $1.7M and current he has shares worth around $1.4M. The CFO at my last review had shares worth around $0.3M and today has shares around $27,000.

There is some insider ownership, but not a lot. Recently some directors have held on to their options. Under this company they have not only options but Deferred Share Units that seem to be for Directors only. The company has lately been buying backs shares because they feel the price is low. None of this tells us much.

The 5 year low, median and high median Price/Earnings Ratios are 9.83, 10.51 and 11.93. The current P/E Ratio is 11.79 based on a stock price of $21.11 and 2014 EPS estimates of $1.79. This stock test says that while the price is reasonable it is in the higher range.

I get a Graham Price of $19.07. The 10 year low, median and high median Price/Graham Price Ratios are 0.90, 1.04 and 1.14. The current P/GP is 1.11 based on a stock price of $21.11. This stock test again says that the price is reasonable, although in a high range.

The 10 year Price/Book Value per Share Ratio is 2.25 and the current P/B Ratio is 2.34 based on a current BV of $9.03 and a stock price of $21.11. The current P/B Ratio is only 3% higher than the 10 year P/B Ratio and this stock price test suggests that the stock price is reasonable.

The 5 year median dividend yield is 4.9% and the current dividend yield is 5.31%, a value some 8.3% higher. Also, if you look at the historical average dividend yield, which is just 4.04%, the current dividend yield is some 31% higher at 5.31. Both these are saying that the stock is cheap.

The stock price might even be lower than what it appears as this company has around $4.00 per share in cash. This works out to be around 19% of the current stock price.

When I look at analysts' recommendations, I find only 2 analysts following this stock and both give a recommendation of Buy. The 12 month consensus stock price is $23.00. This implies a total return of $14.26 with 8.95% from capital gains and 5.31% from dividends.

A December 27, 2013 article in the Ottawa Citizen talks about the government downsizing its workforce. The blogger, Dividend Gangster gives a positive review of this stock in July 2012. There is not much in recent reviews on this stock. The Dividend Blogger has a rather negative attitude to this stock. He does not think that future returns will be much higher than the dividend.

I think that the stock price is rather cheap based on the dividend yield. However, it is cheap for a reason. There was no dividend increase last year and I think that it will not do well again until the economy recovers and I do not see that happening soon. It has great debt ratios which should help see this company through the current economic times. We are on a very slow recovery from the 2008 recession. See my spreadsheet at cty.htm.

This is the second of two parts. The first part was posted on Monday, January 06, 2014 and is available here.

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.

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.

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