Absolute Software Corporation 2

On my other blog I am today writing about dividend increases continue...

I do not own this stock of Absolute Software Corporation (TSX-ABT, OTC-ALSWF). The Motley Fool published an article by Matt DiLallo in December 2014 called The 10 Best Stocks in Canada. It is basically a list of the best-performing Canadian stocks of the past decade. I wrote an article about these stocks .

When I look at insider trading I find no insider buying and insider selling at $1.7M. This is a relatively small amount as it is 0.42% of the stock's market cap. There is some insider ownership with a director owing shares worth $18.4M or 6.1% of the outstanding shares and another director owning shares worth around $3.9M and 1.3% of the outstanding shares.

I get current Price/Earnings per Share Ratio of 58.48 based on a stock price of $9.43 and 2015 EPS estimate of $.16. There is nothing to really measure this against. The earnings just became positive in 2013. The median positive P/E Ratio is 102.76. The median in 2013 was 131.28 and the median in 2014 was 74.24.

There is no Graham Price. The problem is that the book value is negative. This leads to the fact that you cannot do a Price/Book Value per Share Ratio test as the book value is negative.

The 4 year Price/Cash Flow per Share Ratio is 13.63. The current P/CF Ratio is 14.08 a value just 3.3% higher which would suggest a relatively reasonable stock price.

The 10 year median Price/Sales Ratio is 3.63. The current P/S Ratio is 3.53 based on a stock price of $9.43 and sales of $118M CDN$. The current one is slightly lower than the 10 year median so suggests that the stock price is relatively reasonable. However, a P/S Ratio of 3.53 is rather high, but not that high for a fast rising tech stock.

When mentioning price, we should also take into consideration the amount of cash a company has if that cash is a good percentage of the stock price. In this case it is. Currently cash is at $40M. The current stock price is $9.43. The cash is at $1.17 per share. So really, if you buy this stock you are really paying some 12.4% less and only $8.26.

There are a number of analysts following this stock. The analysts' recommendations are Strong Buy or Buy. The consensus recommendation would be a Buy. The 12 month stock price is $8.42 a value lower than the current stock price of $9.43.

PI Financial analyst Pardeep Sangha in an article in CanTech says that he thinks that this stock is a Buy. According to Sleek Money TD Securities recently said this stock is a Buy. There is also a News Wire report from the company talking about the second quarter of 2015.

Sound bite for Twitter and StockTwits is: Reasonable stock price with momentum. See my spreadsheet at abt.htm.

All the ratios are rather high but this is because the stock has momentum. There is a problem with comparing current ratio with past ratio to see how reasonable a stock price is. In the case of a fast rising stock, the ratios can get rather high. The ratios could drop really quickly if we get into a correction or bear market. Also note that the stock price hit a high of $19.92 in 2008 and then dropped to a low of $2.77 in 2009.

This is the second of two parts. The first part was posted on Tuesday, February 17, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Absolute Software Corporation is the industry standard in persistent endpoint security and management for computers, laptops, tablets and smartphones. The Company, a leader in device security and management tracking for 20 years, has over 30,000 commercial customers worldwide. Its web site is here Absolute Software.

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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