I own this stock of TECSYS Inc (TSX-TCS, OTC-TCYSF). I came across this stock when I was looking for a dividend paying small cap stock as a filler stock. I consider a filler stock to be one to soak up small amounts of investment money that I have left over in my account, especially in the TFSA after I have made my main purchase for the year.
When I was updating my spreadsheet, I noticed that they had an earnings loss because their cost of operations went up faster than their revenue. Between 2018 and 2019 their revenue increased by 8.10% but their cost of operations was up 28.14%. Sales & marketing increased 18.68%; General Admin by 47.82% and Research and Development by 29.44%.
Chairman has been selling off shares and his shares have decline by 40% since 2010. They were down another 6.6% between last year and this year. The chairman is the only one I can see that has a substantial number of shares and he currently has 16% of outstanding shares. Note that he also holds shares through his holding company, Dabre Inc. Their financial year ends at April 30 each year. The last financial year is April 30, 2019.
They started to pay dividends in 2008 and have been increasing the dividends nicely ever since. The growth is good (at 15% or over) for the past 5, 10 and 11 year periods. The dividend yields are low (under 2%) and a current yield at 1.73% and 5, 10, and historical yields at 1.24%, 1.53% and 1.57%.
The Dividend Payout Ratios are currently too high. The DPR for 2019 for EPS is not calculable as there was an earnings loss but 5 year coverage at 57%. Analyst do not expect the DPR for EPS is improve until 2021. The DPR for 2019 for CFPS is 458% with 5 year coverage at 44%. Analysts are not giving estimates for Cash Flow.
Debt Ratios are fine, but all have deteriorated this year. Even though they have greatly increased their long term debt, the Long Term Debt/Market Cap s just 0.06, a very low value. The Liquidity Ratio is low and lower than it has been for some time at just 1.24. It has fluctuated in the past, but the 5 year median is 1.61. The Debt Ratio is fine with a current ratio of 1.86 and 5 year median at 2.09. Leverage and Debt/Equity Ratios are a little high at 2.16 and 1.16 with 5 year ratios at 1.91 and 0.91.
The Total Return per year is shown below for years of 5 to 20 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 | 22.87% | 18.71% | 16.95% | 1.76% |
| 2008 | 10 | 18.04% | 28.80% | 26.06% | 2.74% |
| 2003 | 15 | 16.27% | 13.28% | 12.19% | 1.08% |
| 1998 | 20 | 7.60% | 6.99% | 0.61% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.67, 20.68 ad 24.69. The Corresponding 10 year ratios are 18.17, 22.62 and 27.07. The corresponding historical ratios are 9.47, 11.88 and 15.83. The current P/E Ratio is 634.50 based on current stock price of $12.69 and 2019 EPS of $0.02. The P/E Ratio for 2020 is 24.88 based on a stock price of $12.69 and 2020 EPS estimate of $0.51. This stock price testing suggests that the stock price is relatively expensive in 2019. This stock price testing suggests that the stock price is relatively reasonable but above the median for 2020.
I get a Graham Price of $1.17. The 10 year low, median, and high median Price/Graham Price Ratios are 1.45, 1.85 and 2.30. The current P/GP Ratio is 10.89 based on a stock price of $12.69. 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 3.47. The current P/B Ratio is 4.20 based on a stock price of $12.69, Book Value of $39.5M and Book Value per Share of $3.02. The current ratio is 21% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.57%. The current dividend yield is 1.73% based on dividends of $0.22 and a stock price of $12.69. The current yield is some 10.4% higher than the historical yield. This stock price testing suggests that the stock price is relatively reasonable and below the median
The 10 year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 1.73 based on a stock price of 12.69, 2019 Revenue estimate of $95.7M, and Revenue per Share of $7.32. The current ratio is 31% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is that the stock is probably expensive. The P/S Ratio is a good test and it shows the stock as expensive. The thing is that the stock price over the past 10 years has been rising faster than the revenue. The P/B Ratio is also a good test and it also shows the stock as expensive. (Interestingly, if you use the median P/S Ratio for the past 5 years, the ratio is 1.74 and close to the current ratio.)
The only test that shows that the stock as reasonable, is the Dividend Yield test. This is because of the steady increase in dividends. Companies tend to raise the dividends when they are confident of the future. This company is obviously confident of the future.
On the other hand, the Chairman has been steadily selling off his shares and he is the only one with a substantial stake in the company. He could also be selling so that all his investments are not in one company, which is a wise move. Here is a relevant article about this on Global Newswire.
Is it a good company at a reasonable price? I still think this is a good company and I will be holding on to my shares. However, note that I have a relatively small investment in this company. I will not be buying anymore at present because I think it might be on the expensive side at the moment. Gabriel Leung of Beacon Securities on CanTech Newsletter disagrees.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus s $16.75. This implies a total return of 33.73% with 31.99% from capital gains and 1.73% from dividends.
See what analysts are saying on Stock Chase. They are not well followed, but analysts like this company. Kris Knutson of Motley Fool likes this company. A writer on Simply Wall Street talks about recent insider buying. What I have notice is chairman selling off shares. A writer on Simply Wall Street talks about the company’s increased debt, but it is still within prudent limits. Elaine Iseri of Trent Times talk about what analysts have been saying about this company recently.
TECSYS Inc is a provider of supply chain solutions. The company's solution is built on supply chain platform and includes warehouse management, distribution management, transportation management, supply management at point-of-use as well as complete financial management and analytics solutions. Its web site is here TECSYS Inc.
The last stock I wrote about was about was Pulse Seismic Inc. (TSX-PSD, OTC-PLSDF) ... learn more. The next stock I will write about will be Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more on Friday, August 2, 2019 around 5 pm. Tomorrow on my other blog I will write about Dividend Income and Volatility.... learn more on Thursday, August 1, 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.
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