Computer Modelling Group Ltd

On my other blog I am today writing about possible cheap dividend stocks for July 2015 continue...

Sound bite for Twitter and StockTwits is: Dividend Growth Tech Stocks. I have done very well in this stock. It may be slowing down currently, but I will continue to hold the shares I have because I believe that the company has a good future ahead. See my spreadsheet at cmg.htm.

I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). I bought this company in 2008 because it is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. Insiders are currently buying this stock. It has great growth and it is information technology a favourite sector of mine. When I sold some of my TD Bank stock in June 2009, I bought some more. Because the stock grew rapidly and because it is a tech stock, I sold some shares in 2011 to lock in profit.

The dividend yield and the dividend growth are both good on this stock. However, dividend growth has been slowing down lately. The current dividend yield is 3.05% based on a stock price of $13.11. The dividends have growth at 17.3% and 34.9% over the past 5 and 10 years. The last dividend increase was in 2015 and it was a 5.3% increase. They have also given out special dividends from time to time.

The payout ratios, especially for earnings are high. However, once the company collects data for its software it can sell it multiple times. The Dividend Payout Ratio for EPS for 2014 is 97.6% and the 5 year median is 101%. The DPR for CFPS is 63% in 2014 and the 5 year median is 71%.

I have held this stock for around 7 years and my Dividend Yield on my original stock cost is 17.4% and to date my dividends have covered some 76% of my original stock purchase price. If a median price was paid after 5 and 10 years, shareholders would have gotten 7.55% and 48.5% dividend yield on their original cost. Also if a median price was paid, the dividends to date after 5 and 10 years would cover 34.7% and 319% of the original cost.

The 5 and 10 year total return to date is 19.48% and 38.58% per year. The portion of the total return attributable to dividend is 4.29% and 8.08% per year. The portion of the total return attributable to capital gain is 15.19% and 30.50% per year. Do not forget that past return may not reflect future returns. The overall market is currently slowing down as is this stock. Also, do not forget that this stock services the oil and gas industry and these markets are at a low point.

Outstanding shares have increased by 1.9% and 2.4% per year over the past 5 and 10 years. This makes the per share value important. Shares have increased due to stock options and decreased due to Buy Backs. Growth in Revenue, Earnings and Cash Flow are all good. However, analysts do expect slow to no growth in the next financial period.

Revenue has grown at 13.4% and 18.8% per year over the past 5 and 10 years. Revenue per Share has grown at 11.2% and 16% per year over the past 5 and 10 years. For the financial year ending in March 2015, Revenue grew at 13.9% and for the financial year ending March 2016, analysts do expect Revenue growth of just 3.9%

EPS grew at 15.4% and 22.5% per year over the past 5 and 10 years. For the financial year ending in March 2015, EPS grew at 17% and for the financial year ending March 2016, analysts do not expect any EPS growth at all.

Cash Flow grew at 24.7% and 27.8% per year over the past 5 and 10 years. CFPS grew at 22.4% and 24.8% per year over the past 5 and 10 years. For the financial year ending in March 2015, CFPS grew at 23.8% and for the financial year ending March 2016, analysts do expect CFPS declining by around 15%.

The Return on Equity is very high, coming in at 51.4% in 2014 and the 5 year median ROE is 48.3%. They make a high profit because they can sell the same software to more than one customer. The Operational Profit Margin (CF/Revenue) Ratio is 48% for the financial year ending in March 2015.

Debt ratios are very good. The Liquidity Ratio is 2.42 and the Debt Ratio is 2.48 for the March 2015 financial year. I like anything 1.50 and higher. Leverage and Debt/Equity Ratios are low and good at 1.68 and 0.68.

This is the first of two parts. The second part will be posted on Tuesday, July 7, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling.

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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