Accord Financial Corp

Sound bite for Twitter and StockTwits is: Dividend growth financial. This stock currently seems to be cheap but of a high risk. See my spreadsheet on Accord Financial Corp.

I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). Fred Poulin from StockTwits recommended this stock saying it was a small cap that pays dividends. Also the stock has a solid background and would be a good filler stock.

What I have noticed is that this company seemed to have hit a peak in 2010 and has not gone anywhere since. A peak was hit in revenue and in EPS. The other thing is that dividend growth was cut in half after 2011. Prior to 2011 dividend 5 year dividend growth was 9.2% per year. The current 5 year dividend growth is 3.7% per year. Also there was no dividend increase in 2016 and so far no increase in 2017.

The current dividend yield is good and the dividend growth is low. However the yield used to be in the moderate range. The current dividend yield is 4.11%. The 5 year median dividend yield is 3.90% with a historical median of 2.56%. The dividend growth as was 3.7% and 6.1% per year over the past 5 and 10 years.

For a financial stock the debt ratios are relatively good. For the 2016 financial year the Long Term Debt/Market Cap Ratio was 0.79, the Debt Ratio was 1.96 and the Leverage and Debt/Equity Ratios were 2.05 and 1.05. At the end of the second quarter all these ratios declined with Long Term Debt/Market Cap Ratio at 1.28, the Debt Ratio at 1.65 and the Leverage and Debt/Equity Ratios were 2.54 and 1.54.

Note that for the Long Term Debt/Market Cap Ratio and Leverage and Debt/Equity Ratios lower ratios are better and the Debt Ratio higher is better. The other thing to note is that company says that for the second quarter they are still in compliance with their loan covenants.

Revenue and EPS have had meager or no growth over the past 5 and 10 years. Growth in Revenue per Share is 1.05% and 1.17% per year over the past 5 and 10 years. EPS is down by 1.45% and up and 0.93% per year over the past 5 and 10 years. Things have not improved in the second quarter of 2017 as Revenue, Earnings and Cash Flow are all decreasing.

The 5 year running average is better for both Revenue per Share and EPS. Here Revenue per Share is up by 2.4% and 2.1% per year over the past 5 and 10 years. EPS is up by 5.4% and 2.8% per year over the past 5 and 10 years. When there is volatility, then comparing one 5 year period to the pervious one or to a 5 year period 10 years ago, can give you a better idea of if there is growth.

The cash flow has been growing well despite no growth in revenue or earnings. The Cash Flow per Share is up by 29% and 16.6% per year over the past 5 and 10 years. Interestingly, when I look at the 5 year running average, these values are lower at 10.3% and 14.2% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 8.57, 10.06 and 11.56. The corresponding 10 year values are 8.77, 10.63 and 11.95. The historical values are 8.55, 10.25 and 11.56. These are fairly consistent. The current P/E Ratio is 14.34 based on a stock price of $8.75 and 12 month EPS to end of second quarter. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $11.11. The 10 year low, median and high median Price/Graham Price Ratios are 0.64, 0.74 and 0.85. The current P/GP Ratio is 0.79 based on a stock price of $8.75. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Book Value per Share Ratio is 1.27. The current P/B Ratio is 0.97 based on a stock price of $8.75, Book Value of $74.7M and BVPS of $8.99. The current P/B Ratio is some 23.5% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

The historical dividend yield is 2.56%. The current dividend yield is 4.11% based on dividends of $0.36 and a stock price of $8.75. The current dividend yield is some 60% above the historical yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.44. The current P/S Ratio is 2.61 based on 12 month to the end of the second quarter Revenue of $27.9M, Revenue per Share of 3.35 and a stock price of $8.75. The current P/S Ratio is some 7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. The P/S Ratio testing is important because it is ultimately Revenue growth that pushes EPS and Cash Flow.

There does not seem to be any analysts following this stock. However, I got a CFRA report and they have a recommendation of Underperform. They also say that the stock is of High Risk. They give no estimates.

Austin Wood on Simply Wall Street talks about who owns this company. He says the main holders of stocks are the general public, Private Equity and Private companies. Toi Williams on True Blue Tribune talks about the CEO purchasing more shares. There are interesting but old comments on this company at Stock Chase.

Accord Financial Corp. is a provider of asset-based financial services to businesses, such as asset-based lending (ABL), including factoring, lease financing, working capital financing, credit protection and receivables management, and supply chain financing for importers. Its web site is here Accord Financial Corp.

The last stock I wrote about was about was Just Energy Group Inc. (TSX-JE, NYSE-JE)... learn more. The next stock I will write about will be Telus Corp. (TSX-T, NYSE-TU)... learn more on Wednesday, September 20, 2017around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 – Jaime Purvis... learn more on Tuesday, September 19, 2017 around 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.

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