Exco Technologies Ltd. 2

I do not own this stock of Exco Technologies Ltd. (TSX-XTC, OTC- EXCOF). 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.

The insider trading report shows $0.9M of insider selling and $0.7M of net insider selling with $0.2M of insider buying. The CEO owns shares worth around $79.7M, an officer owns shares worth around $39M and Edward James Kernaghan, (of Kernaghan Securities Ltd.) owns just over 10% of the shares worth around $39.9M. So there are insiders and others with large stakes in this company.

The 5 year low, median and high median Price/Earnings per Shares ratios are 7.64, 8.58 and 10.30. This is after getting rid of the high negative P/E Ratios due to recent earning loses. If you go back before the troubles of 2006, the median P/E was 16.03, which is probably a more reasonable P/E Ratio. The current P/E Ratio is 12.86 based on 2014 earnings estimate of $0.65 and a current stock price of $8.36. The current P/E is probably a reasonable one.

I get a Graham Price of $7.85. The 10 year low, median and high median Price/Graham Price Ratios are 0.73, 1.01 and 1.33. The current P/GP Ratio is 1.07 and this stock test suggests that the stock price is relatively reasonable.

The 10 year Price/Book Value per Share Ratio is 1.19. The current P/B Ratio is 1.98, a value some 67% higher. This stock test suggests the current stock price of $8.36 is relatively high.

The 5 year median dividend yield is 3.16% and the current dividend yield is 2.39% a value some 24% lower and suggesting that the stock price is relatively high. There are some problems with this test because of the problems this company suffered in 2008 and 2009, where the stock crashed and the yield went high.

There are a number of ways of coming up with an historical average or median dividend yield and these values suggest that the stock price is probably reasonable. There are problems here also as the dividend has been growing faster than Dividend Payout Ratios. Given that the DPRs are still quite reasonable; this is not currently a problem.

There are only a couple of analysts following this stock and the stock is given a Strong Buy and a Hold recommendation. The consensus would be a Buy recommendation. The 12 month consensus stock price is $9.13. This implies and 12 month total return of 11.60% with 2.39% from dividends and 9.21% from capital gains.

Some analysts made comments on this stock and was reported by WKRB, News and Analysis. The site of Bann Ronn gives some technical analysis on this stock.

Given the above stock price testing, I think that the stock price is probably reasonable. It is certainly not cheap. You have to wonder if the risk of owning this stock is worth just a reasonable price. See my spreadsheet at xtc.htm.

This is the second of two parts. The first part was posted on Monday, February 10, 2014 and is available here.

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.

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.