Friday, February 9, 2018

Absolute Software Corporation

Sound bite for Twitter and StockTwits is: Dividend growth tech. A lot of stock price testing cannot be done due to earnings losses and a negative book value. What I can do shows that the stock is reasonable in a P/S Ratio test. Currently the dividend is not in danger because even though the book value is negative, the company does have lots of cash. Current cash is some 14.5% of the stock price. See my spreadsheet on Absolute Software Corporation .

I do not own this stock of Absolute Software Corporation (TSX-ABT, OTC-ALSWF). The Motley Fool published an article by Matt DiLallo in December 2014 called The 10 Best Stocks in Canada. It is basically a list of the best-performing Canadian stocks of the past decade. I got this stock from this list.

The problem I see with this stock is that the book value is negative. They really should not be paying out a dividend with a negative book value. Although I must admit the company has lots of cash. At the end of June 2017 the cash was equal to 13.8% of the stock's price. Over the past 5 year the median percentage of cash covering the stock price was 13%. This is relatively quite high.

Dividend yields are moderate to good with dividend growth moderate. The current dividend yield is 4.62% with the median dividend yield at 3.58%. The dividend growth has been 12.5% per year over the past 4 years. Dividends were only started in 2013.

The stock has only been around since 2000. So I have total return for durations of 5, 10, 15 and 17 years. Total return is mixed with those buying this stock 10 years ago taking a loss, but other durations are fine. The total return for durations of 5, 15 and 17 years are 10.72%, 29.92% and 18.91% per year with capital gain at 6.17%, 27.49% and 17.25% per year and dividends at4.55%, 2.43% and 1.66% per year. (Note dividends are only included in last 4 years.)

For investor who has had this stock for 10 years, they have suffered a loss because of a big spike up in stock price in 2007. So for them there is a total negative return of 7.92% per year, with capital loss at 9.34% per year and dividends at 1.42% per year.

You cannot do any Price/Earnings per Share Ratio testing on this stock. Since they had so many years with earnings losses, most P/E Ratios are negative. The current P/E Ratio is 279.89 based on a stock price of $6.93 CDN$ and 2018 EPS estimate of $0.025 CDN$ ($.02 US$). The P/E Ratio for 2019 is not quite so bad at 55.98 and it reaches a moderate 15.99 in 2020 as earnings estimates for 2019 and 2020 are $0.26 CDN$ ($0.12 US$) and $0.48 CDN$ ($35 US$).

I can do no testing using the Graham Price because with this stock either the earnings are negative or the book value is negative. With either of these negative, Graham Price cannot be calculated. I cannot do any Price/Book Value Ratio testing when the Book Value is negative.

I get a historical median dividend yield of 3.58%. Mind you there is not much in historical here as dividends only started in 2013. The current dividend yield is 4.62% based on dividends of $0.32 CDN$ and a stock price of $6.93 CDN$. The current dividend yield is some 28% above the historical median dividend yield. This testing would imply that the stock price is relatively cheap.

This company reports in US dollars. The 10 year median Price/Sales (Revenue) Ratio is 2.85 US$. The current P/S Ratio is 2.40 U$ based on 2018 Revenue of $94.5 US$, Revenue per Share of $2.37 US$ and a stock price of $5.68 US$. The current P/S Ratio is some 15.8% lower than the 10 year median P/S Ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is probably the best test for this stock.

When I look at analysts' recommendations I find Strong Buy (1), Buy (1) and Hold (7). The consensus would be a Hold. The 12 month stock price consensus is $6.32 US$ or $7.03 CDN$. This implies a total return of 14.52% with 12.90% from capital gains and 4.62% from dividends.

Staff Writer at Akron Register correctly shows that the Book to Market Value is negative. Stefani Robinson on True Blue Tribune talks about some recent analysts ratings. See what analysts are saying about this stock on Stock Chase. One analyst said it was a short term pick.

Absolute Software Corp provides endpoint security and data risk management solutions for commercial, healthcare, education and government customers, tablets and smartphones. Its web site is here Absolute Software Corporation.

The last stock I wrote about was about was Canadian National Railway (TSX-CNR, NYSE-CNI)... learn more. The next stock I will write about will be ARC Resources Ltd. (TSX-ARX, OTC-AETUF)... learn more on Monday, February 12, 2018 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.

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.

No comments:

Post a Comment