TECSYS Inc. 2

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 left over in my account, especially in the TFSA after I have made my main purchase for the year.

When I look at insider trading I see $0.4M of insider selling and no insider buying. Insider selling is only 0.48% of market cap of this stock and so is low. There is little in the way of outstanding stock options.

There is insider ownership by the Brereton family with Peter Brereton, CEO owning shares worth around $2.9M, with David Brereton, Chairman owning shares worth around $20.9M and Kathryn Brereton, 10% holder owning shares worth around $7.1M. This family owns around 44% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 19.67, 24.56 and 29.44. The current P/E Ratio is 28.38 based on a stock price of $6.81 and April 2015 earnings estimate of $0.24. This stock price test suggests that the stock price is still within a relatively reasonable range, but at the high end of this range. (Note that the 10 year corresponding P/E Ratios are a lot lower than the 5 year ones at 11.24, 13.54 and 16.46.)

I get A Graham Price of $2.79. The 10 year low, median and high median Price/Graham Price Ratios are 0.94, 1.19 and 1.46. The current P/GP Ratio is 2.44 based on a stock price of $6.81. This stock price test suggests that the stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.47. The current P/B Ratio is 4.73 a value some 222% higher. The current P/B Ratio is based on a current stock price of $6.81 and current BVPS of $1.44. This stock price test suggests that the stock is relatively expensive.

We have not got much to work with on dividend yield, however, the 5 year median dividend yield is 2.64% and the current dividend yield at 1.32% is 50% lower. The historical average dividend yield is 2.70% and the historical median dividend yield is 2.68%. All this suggests that the stock is relatively expensive.

When I look at analysts' recommendations I see Strong Buy and Buy recommendations. The consensus recommendations would be a Strong Buy. The 12 month consensus stock price is $9.00. This implies a total return of 33.48% with 1.32% from dividends and $31.16% from capital gains.

I could see this as a momentum buy. The stock price has been rising since April 2012. Neither it nor the stock market seems to be slowing down yet. This buying, from my perspective, is for capital gains, not long term investment.

Sound bit for Twitter and StockTwits is: Stock price expensive, momentum buy? I think this is a good stock and I will hold on to what I have. However, I do think that currently it is on the expensive side. A P/E Ratio of 28.38 is not all that high, but the P/B Ratio of 4.73 is high. See my spreadsheet at tcs.htm.

This is the second of two parts. The first part was posted on Thursday, August 21, 2014 and is available here. The first part talks about the stock and the second part talks about the 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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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