Wednesday, June 21, 2017

Computer Modelling Group Ltd

Sound bite for Twitter and StockTwits is: Dividend growth tech. This is considered a tech stock, but it is also in the oil and gas sector. It is lately having a hard time as is every stock in the oil and gas sector. The price is probably reasonable. See my spreadsheet on Computer Modelling Group Ltd.

I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). When selling SNC in July 2008, I was looking for something to buy. This company is a dividend paying growth stock that would also be considered to be a small cap with a capitalization at that time of around $115 million. At that time Insiders were buying this stock. It has great growth and it is information technology a favourite sector of mine.

This stock used to have a good record of increasing the dividends. However, it is having a hard time as is all the stocks in the oil and gas sector. Currently they are having a hard time covering the dividend with earnings. They have prudently stopped increasing their dividends. The dividends have been flat since 2015. I doubt there will be any dividend increases until the EPS is above the dividends again. Analysts do not expect that to have over the next couple of years. Analysts do not expect the dividends to decrease either over the next couple of years.

This has been a great stock for me. I have held it for 8.9 years and my total return is 26.99% with 19.72% from capital gains and 7.27% from dividends. The dividends I have received so far have covered 102% of the cost of my shares. I am making a dividend yield of 17.4% on my original stock purchase price.

The thing is that I will continue to do fine on this stock, but people buying it today will not do as well. The easy money on this stock has been made. However, it could do very well again if oil and gas picks up in price. It is hard to know if and when this might occur.

A positive point is that the stock has very good debt ratios. The Liquidity Ratio is 1.96. It has no long term debt. The Debt Ratios is 2.22. The Leverage and Debt/Equity Ratios are 1.82 and 0.82 respectively.

The 5 year low, median and high median Price/Earnings per Share Ratio are 20.70, 30.26 and 37.95. The corresponding 10 year values are 20.34, 25.62 and 30.86. The historical ratios are 9.59, 13.15 and 16.98. The P/E Ratios have grown over time, especially after 2010. The current P/E Ratio is 33.83 based on a stock price of $10.15 and 2017 EPS estimate of $0.30. This stock price testing suggests that the stock price might be reasonable, but it is above the median.

I get a Graham Price of $2.23. The 10 year low, median and high median Price/Graham Price Ratios are 2.60, 3.64 and 4.33. The current P/GP Ratio is 4.55 based on a stock price of $10.15. This stock price testing suggests that the stock is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 11.77. The current P/B Ratio is 13.74 based on a stock price of $10.15 and BVPS of $0.74 ($58.178M BV). The current P/B Ratio is some 16.7% higher than the 10 year median ratio. This stock price testing suggests that the stock price is reasonable, but above the median.

The historical dividend yield is 3.55%. This current dividend yield is 3.94% based on dividends of $0.40 and a stock price of $10.15. The current dividend yield is some 11% higher than the historical median. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations, I find Buy, Hold, Underperform and Sell recommendations. Most of the recommendations are a Hold, and the consensus recommendation is a Hold. The 12 month stock price consensus is $9.81. This is below the current stock price of $10.15. So the total return would be 0.59% with 3.94% from dividends and a capital loss of 3.35%.

Renata Jones on Sports Perspectives talks about insider selling at this company. Over the past year the Insider Selling/Market Cap Ratio was 0.48%. This is very high as generally this ratio is in the 0.01% or 0.02% range. The problem with selling is that you never know why people are selling. When there is insider buying you know it is because the insider feel good about the company's future.

When insiders sell it could be for a lot of reasons. They may just need to money. Often in tech companies people are selling because of stock options and they look at stock options as part of their salary. For this company I am following the shares held by the CEO, CFO, another officer, two directors and the Chairman. Here the officer, one director and the chairman had the same number of shares as last year. The CFO and one director increased their shares. The CEO decreased his shares.

Sarah Dixon on Clayton News Review gives some technical analysis of this company. She said it has a The Piotroski F-Score of 6, where a score of 9 shows good financial strength and a sore of one show a low value stock. Demetris Afxentiou of Motley Fool likes this stock. See what analysts think of this stock on Stock Chase. They mostly like it, but it is not widely followed.

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 Group Ltd.

The last stock I wrote about was about was CI Financial Corp (TSX-CIX, OTC- CIFAF)... learn more. The next stock I will write about will be Parkland Fuel Corp. (TSX-PKI, OTC-PKIUF)... learn more on Friday, June 23, 2017 around 5 pm. Tomorrow on my other blog I will write about Debt Ratios... learn more on Thursday, June 22, 2017around 5 pm.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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