Enghouse Systems Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Tech. This stock looks quite expensive to me. Not only it is relatively expensive compared to its past, the past values are rather high. For example, the 10 year median P/B Ratio is high at 2.52. A good P/B Ratio is closer to 1.50. However, I must admit that tech stocks tend to have high ratios. See my spreadsheet on Enghouse Systems Ltd.

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

There is a lot of insider selling. The Net Insider Selling is at 1.40% of market cap. You expect this to be closer to the 0.01% range. Most of the selling is by the Chairman and CEO. It is the same person for both jobs. The problem, of course, is that you never know why someone is selling.

Dividends are low, but dividend growth is good. I consider low dividend yield to be under 2%. The current dividend is 1.03% with 5 and 9 year median dividend yields at 1.07% and 1.52%. I think that dividend growth over 15% is good. The dividend growth over the past 5 and 9 years is at 21% and 22% per year. Dividends have only been paid for 9 years.

This stock seems to have been listed on a stock exchange since 1995. So I have total return for 5, 10, 15, 20 and 22 years which are 30.06%, 24.71%, 18.96%, 16.85% and 15.32% per year. Total return includes both capital gains and dividends. This is showing compounded return over these years. Total return here is calculated from December to December.

The 5 year low, median and high median Price/Earnings per Share Ratios are 26.42, 29.94 and 34.22. The 10 year corresponding ratios are 17.65, 24.54 and 32.00. The historical corresponding ratios are 16.28, 20.71 and 24.42. It would appear that the recent run up in price is based on higher P/E Ratios. The current P/E Ratio is 31.14 based on a stock price of $63.53 and 2018 EPS estimate of $2.04. This stock price testing suggests that the stock price is relatively reasonable, but above the median and getting close to expensive.

I get a Graham Price of $22.83. The 10 year low, median and high median Price/Graham Price Ratios are 1.13, 1.49 and 1.95. The current P/GP Ratio is 2.78 based on a stock price of $63.53. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 2.52. The current P/B Ratio is 5.60 based on Book Value of $306.40, Book Value per Share of $11.35 and a stock price of $63.53. The current P/B Ratio is some 122% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

The historical dividend yield is 1.52%. The current dividend yield is 1.01% based on dividends of $0.64 and a stock price of $63.53. The current dividend yield is some 34% lower than the historical one. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 2.98. The current P/S Ratio is 4.97 based on 2018 Revenue estimate of $345M, Revenue per Share of $12.78 and a stock price of $63.53. The current ratios is some 57% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations I find I find Buy (3) and Hold (1). The consensus recommendation would be a Buy. The 12 month stock price consensus is $69.82. This implies a total return of 1376% with 12.72% from capital gains and 1.03% from dividends based on a current stock price of $61.94.

Rex Bailey of Week Herald.talks about the Chairman and CEO of this company doing insider selling. Stock Press Contributor on Stock Press Daily says that the Williams Percent Range is -25.68. That means that the stock is neither overbought nor oversold, but it is closer to overbought. Nicole Wilson on Ledger Gazette talks about some recent analysts recommendations. See what analysts are saying about this stock on Stock Chase.

Enghouse Systems Ltd is active in the software industry in Canada. Its business involves provision of software services to a variety of end markets. The company's major product is software for the communication companies. Its web site is here Enghouse Systems Ltd.

The last stock I wrote about was about was Sylogist Ltd (TSX-SYZ, OTC-SYZLF)... learn more. The next stock I will write about will be Valener Inc. (TSX-VNR, OTC-VNRCF)... learn more on Monday, January 29, 2018 around 5 pm.

Also, on my book blog I have put a review of the book SPQR by Mary Beard learn more...

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