Absolute Software Corporation

On my other blog I am today writing about oil 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 . Of the stock I had not heard of before, Absolute Software Corporation was the only one I might be interested in. This is because it just started to pay dividends. So I have done a spreadsheet on this stock to get a better look at it.

This company did make a great return over the 10 years prior to the end of 2014. The total return was 39.92% per year with 39.07% from capital gains and 0.96% per year from dividends. This has slowed down somewhat with the 5 and 10 year total returns to the current date at 24.35% and 19.95% per year with 20.58% and 18.14% from capital gains and 2.03% and 0.96% from dividends.

Mine you the return is still great but instead of 2606% increase in the stock price over 10 years to the end of 2014, the increase is at 430% over the past 10 years to date. So growth has slowed down.

What other growth there has been is growth in revenue. Revenue per Share is up by 11.3% and 22.1% over the past 5 and 10 years in US$ and up by 15.7% and 26.2% per year in CDN$. This company just started to report in US$ in 2012. This change was probably made as they sell their products worldwide.

The first year that the company had any positive earnings was in 2013. Earnings were up by 118% from 2013 to 2014 in CDN$. They have just reported the second quarter of 2015 and earnings are up by 47% in CDN$ for the 12 month ending December 2014 compared to the 12 months ending June 2014. (The annual reporting for this company is at the end of June each year.)

If you look strictly at Cash Flow per Share you get growth of 1.5% and 32.8% per year over the past 5 and 10 years. The usual measure of cash flow is cash flow from operations less non-cash working capital and here the cash flow is only positive since 2011 and is up by 40.08% per year over the past 3 years. I generally look at the last type of cash flow only. All these values are in CDN$.

One of the problems with the company is that the Book Value is negative. This means that the liabilities are higher than the assets. The current Debt Ratio is 0.93. The Liquidity Ratio is not great either with a value of 0.97. This means that the current assets cannot cover the current liabilities. However, if you add in cash flow after dividends, the Liquidity Ratio is better at 1.16. (I would rather see it at 1.50.)

However, another interesting thing about this company is the amount of cash it has. 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. This is just another way at looking at a stock price.

Sound bite for Twitter and StockTwits is: Interesting div paying small cap tech. See my spreadsheet at abt.htm.

This is the first of two parts. The second part will be posted on Wednesday, February 18, 2015 and will be 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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