Friday, January 27, 2017

Enghouse Systems Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Tech. Price seems relatively expensive and stock price has lost momentum. Not a good buy spot. The company has good growth. In all my growth figures I just see green. I mark most growth figures of 8% and up in green. See Color Coding on my Spreadsheets. See my spreadsheet on Enghouse Systems Ltd.

I do not own this stock of Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF). Note the change in the TSX symbol. This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend.

You would buy this stock for diversification. You should expect volatility. Dividends are low and the Dividend Payout Ratios are low to moderate. You do not want them to payout much in dividends as the company needs to retain earnings for future reinvestments. This is a dividend growth stock. This would be a good stock when building a portfolio.

Dividends are low with a moderated Dividend Payout Ratio and good growth in dividends. The current dividend is just 1.08% based on dividends of $0.56 and a stock price of $51.88. Dividends have grown at 23.6% and 22.9% per year over the past 5 and 10 years. The last dividend increase was made last year and it was for 16.7%.

The Dividend Payout Ratio EPS for the financial year ending in October 2016 is 29.9%. The 5 year DPR is 32.1%. The DPR for CFPS is 16.1% with the 5 year payout at 16.9%. This is also a good payout rate.

The have almost no long term debt. The Liquidity Ratio for 2016 is low at 1.40 but the 5 year median is 1.53. This ratio has been declining lately so this should be watched. The Debt Ratio for 2016 is 2.78 and this is good. Leverage and Debt/Equity Ratios are also good at 1.56 and 0.56 respectively.

The 5 year low, median and high median Price/Earnings per Share Ratios are 24.47, 29.34 and 34.22. The corresponding values for 10 years are 17.65, 24.54 and 32.21. The corresponding historical values are 15.99, 20.53 and 24.06. It would appear some the capital gain is due to higher P/E Ratios. However, Tech companies often have higher P/E Ratios than other companies. The current P/E Ratio is 33.04 based on 2017 EPS estimate of 1.57 and a stock price of $51.88. This stock price testing suggests that the stock price is relatively expensive.

One thing to look for in Tech companies is momentum. This stock had upwards momentum until the end of 2015 and since then the price has been going down and it is rather choppy and price is not going anywhere. Not the time to buy a Tech stock.

I get a Graham Price of $18.78. The 10 year low, median and high median Price/Graham Price Ratios are 1.13, 1.49 and 1.72. The current P/GP Ratio is 2.76 based on a stock price of $51.88. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 1.93. The current P/B Ratio is 5.20 a value some 170% higher. The current P/B Ratio is based on BVPS of $9.98 and a stock price of $51.88. Problem is that stock price is increasing faster than BV. This stock price testing suggests that the stock price is relatively expensive.

This 9 year median dividend yield is 1.68%. The current dividend yield is 1.08% a value some 35% lower. The current dividend yield is based on dividends of $0.56 and a stock price of $51.88. This stock price testing suggests that the stock price is relatively expensive.

When I look at Analysts' Recommendations, I find only 3 analysts following this stock and they all rate it a Buy. The consensus recommendation is a Buy. The 12 month stock price is $67.00. This implies a total return of $30.22 with 29.24% from capital gains and 1.08% from dividends.

Brent Freeman says in a report at Simply Wall Street that this company got hit with the down turn badly because of lack of geographic diversification. Karen Cowles on Gilbert Daily says that this company has a Value Composite score of 61. This is using a scale from 0 to 100 where a lower score may indicate an undervalued company and a higher score would represent an expensive or possibly overvalued company. I think this is saying it is neither over nor undervalued. See what analysts say on Stock Chase. They mostly prefer other companies.

The last stock I wrote about was about was Transcontinental Inc. (TSX-TCL, OTC-TCLAF)... learn more . The next stock I will write about will be Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM)... learn more on Monday, January 30, 2017 around 5 pm.

Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse Systems Ltd.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

No comments:

Post a Comment