Wednesday, September 17, 2014

MacDonald, Dettwiler & Associates

On my other blog I am today writing about people being enraged about stock write ups continue...

I do not own this stock of MacDonald, Dettwiler & Associates (TSX-MDA, OTC-MDDWF). I read about this stock in MPL Communication's Advice Hotline dated October 10, 2012. CanTech likes it also. It is a Tech stock with dividends.

This stock just started to pay dividends in 2011. They have had one dividend increase in 2012 and it was a large 30% increase. There were no increases in dividends in 2013 or this year. Dividends are paid semi-annually. It will be interesting to see if this stock turns out to be a dividend growth stock or not.

The Dividend Payout Ratio for 2013 is at 43% for EPS and at 15.7% for CFPS. The DPR for 2014 is expected to be around 37% for EPS and 21% for CFPS.

Shareholders have done well over the past 5 and 10 years with the total return over these periods at 16.34% and 12.91% per year. The capital gain portion of this total return is 14.72% and 12.16% per year. The dividend portion of this total return is at 1.62% and 0.75% per year. The portion of the return for dividends is low because the company just started to pay dividends.

The outstanding shares have decreased over the past 5 and 10 years by 2.2% and 0.6% per year. The shares have increased due to Share Issues and Employee Stock Purchase Plan. The outstanding shares have decreased due to Buy Backs. Shares for Stock Options are bought on the open market.

There is good growth in revenues, earnings and cash flow. The growth in Revenue per Share is at 11.5% and 11.8% per year over the past 5 and 10 years. The growth in EPS is at 20.3% and 10.3% per year over the past 5 and 10 years. The growth in CFPS is at 19% and 16.4% per year over the past 5 and 10 years.

One thing that I do not like about this stock is the debt ratios. The Liquidity Ratio for 2013 is at 0.71. Even adding in cash flow less dividends just gets to a ratio of 0.81. If you add back in the current portion of the long term debt and cash flow less dividends we are still just at 0.87. When this ratio is below 1.00, it means that the current assets cannot cover the current liabilities.

While the Debt Ratios, Leverage and Debt/Equity Ratios are not what I really like, they are acceptable. The Debt Ratio for 2013 was at 1.45. Leverage and Debt/Equity Ratios are at 3.25 and 2.25. The positive thing I can say is that they are much better than for 2012.

The Return on Equity was been below 10% once over the past 5 years and twice over the past 10 years. The ROE for 2013 was at 13.2% and the 5 year median is 20.3%. The ROE on comprehensive income is much higher with the one for 2013 at 36.6% and the 5 year median at 26.9%.

Sound bit for Twitter and StockTwits is: An interesting dividend tech stock. If I bought this stock, I would be worried about the debt ratios. The problem with low Liquidity Ratios is that a company could easily get into trouble in a recession. Companies with good debt ratios have an easier time weathering bad times. See my spreadsheet at mda.htm.

This is the first of two parts. The second part will be posted on Thursday, September 18, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

MacDonald, Dettwiler & Associates Ltd. provides solutions that capture and process large amounts of data, produce essential information and improve the decision making and operational performance of business and government organizations worldwide. Its web site is here MacDonald.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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