I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). I bought this company in 2008 because it is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. Insiders are currently buying this stock. It has great growth and it is information technology a favourite sector of mine. When I sold some of my TD Bank stock in June 2009, I bought some more. Because the stock grew rapidly and because it is a tech stock, I sold some shares in 2011 to lock in profit.
When I was updating my spreadsheet, I noticed Dividend Payout Ratios were too high, which is a negative. Basically, they are using cash on hand to fund part of the dividend payments. A positive is that the company has no long term debt and great debt ratios. The company has not been doing well over the past few years. See chart below.
Talk about dividends yields and growth. The company stopped growing its dividends back in 2015 because they were paying out too much relative to earnings and cash flow. They have had cash on hand to make up the difference. They are tied into the oil and gas industry which, in Canada, might do better if we actually build the pipeline the Liberals have now approved.
The dividend yields are in the moderate to good range. The current dividend is 5.49% with 5, 10 and historical yields at 4.26%, 3.65% and 3.63%.
The Dividend Payout Ratios are too high. The DPR for EPS for 2018 was 142% with 5 year coverage at 126%. The DPR for CFPS is 75% with 5 year coverage at 78%. The dividends could be at risk. Analysts are quoting slightly lower dividends in for 2020 and 2021. They are paying part of the dividends from cash on hand. It is hoped that the business will pick up before they run out of cash. The time to get concerned about payout ratios is if a company goes into debt to pay dividends. This company has no debt.
Debt Ratios are very good. There is not Long Term Debt. Also, they have no goodwill nor intangible assets on their books. The Liquidity Ratio for 2018 at 1.71 is the lowest it has ever been. The 5 year median ratio is 2.03. The Debt Ratio is 2.10 with 5 year median at 2.31. The Leverage and Debt/Equity Ratios 1.91 and 0.91
The Total Return per year is shown below for years of 5 to 23 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 1.85% | -10.33% | -14.48% | 4.15% |
| 2008 | 10 | 12.11% | 25.58% | 13.51% | 12.07% |
| 2003 | 15 | 23.77% | 38.13% | 21.21% | 16.92% |
| 1998 | 20 | 46.18% | 29.43% | 16.75% | |
| 1991 | 22 | 18.96% | 13.51% | 5.46% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 20.70, 31.79 and 34.12. The 10 year corresponding ratios are 21.01, 28.93 and 33.96. The historical ratios are 10.89, 15.10 and 18.78. The current P/E Ratio is 27.50 based on a stock price of $7.15 and 2020 EPS estimate of $0.26. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $1.86. The 10 year low, median, and high median Price/Graham Price Ratios are 3.15, 4.04 and 4.70. The current P/GP Ratio is 3.85 based on a stock price of $7.15. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 12.83. The current P/B Ratio is 12.14 based on Book Value for $47,235M, Book Value per Share of 0.59 and a stock price of $7.15. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.63%. The current dividend yield is 5.59% based on dividends $0.40 and a stock price of $7.15. The current yield is 54% higher than the historical median yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 10.39. The current P/S Ratio is 7.73 based on 2020 Revenue estimate of $74.2M, Revenue per Share of $0.92 and a stock price of $7.15. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is cheap to reasonable. This is a tech stock, but it is working for the oil and gas industry. When the oil and gas industry have problems, so does this company.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $7.71. This implies a total return of 13.43% with 7.83% from capital gains and 5.59% from dividends.
See what analysts are saying at Stock Chase. They do something no one else is doing. A writer on Simply Wall Street using the Discounted Cash Flow (DCF) model says it is fairly valued . A writer on Simply Wall Street is not impressed with the company’s ability to pay dividends. Currently they are using part of their excess cash to pay the dividends. It is a valid criticism. Steve James on Garland Gazette say the company is neither under or oversold using the Value Composite One (VC1) is a method.
Computer Modelling Group Ltd is a Canada-based provider of reservoir simulation software for the oil and gas industry. Its capabilities include integrated analysis and optimization, black oil and unconventional simulation, reservoir and production system modelling, post-processor visualization, compositional simulation, thermal processes simulation, and fluid property characterization. The firm has operations in over 50 countries in the Americas, Europe, Middle East, Africa, and Asia-Pacific regions. 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 28, 2019 around 5 pm. Tomorrow on my other blog I will write about Jared Dillian, 10th Man.... learn more on Thursday, June 27, 2019 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