Wednesday, September 11, 2019

Accord Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. The shares are probably cheap. There is significate insider ownership and recent insider buying. However, the company has slowed down in recent years. It would be nice to see them increase the dividend as this would show management’s confidence in the future. See my spreadsheet on Accord Financial Corp.

I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). If I was looking for a small cap financial stock, I would consider this stock. The dividend is good and it does raise the dividend in the past. It has had some problems recently, but a lot of companies are with this long drawn out recover. As with all small cap stocks there is low trading volume.

When I was updating my spreadsheet, I noticed that they used to give quite good dividend increases, then the increases stopped in 2015 and there have been none since. There has always been good insider buying on this stock, including in 2019, but at 0.06% it is the lowest. Past years were in 2018 at 0.25% and 2017 at 0.36%. You would expect Net Insider Buy to be around 0.01% to 0.2%. However, this is a rather small company with around $72M.

Talk about dividends yields and growth. Dividend yields are moderate (2% to 4% range). The current dividend is 4.22%. The 5, 10 and 15 year median dividend yields are 3.86%, 4.00% and 2.62%. The last dividend increase was in 2015 and it was for 5.9%. Dividend have been flat since.

The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 29% with 5 year coverage at 38%. The DPR for CFPS for 2018 is 23% with 5 year coverage at 7%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 2.95. However, this is a financial services company so I looked at Long Term Debt/Cash Ratio and it is 0.63. So, Cash (and near cash) adequately covers the debt. The Liquidity Ratio for 2018 is 12.18 and very high. The Debt Ratio is 1.47 which is good for a financial services stock. The Leverage and Debt/Equity Ratios are fine at 3.28 and 2.24 for 2018.

The Total Return per year is shown below for years of 5 to 26 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.

For Dividend Growth, I have up to 31 years. According to their annual reports, the company started to pay dividends in 1988 but did not go public on the TSX until 1992.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 2.38% 7.18% 2.95% 4.23%
2008 10 4.14% 9.11% 4.58% 4.53%
2003 15 5.56% 7.09% 1.71% 5.38%
1998 20 2.98% 9.23% 3.81% 5.42%
1993 25 2.38% 9.85% 4.85% 5.00%
1992 26 10.11% 12.31% 6.43% 5.88%
1987 12.25%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.46, 11.20 and 12.34. The corresponding 10 year ratios are 8.56, 10.04 and 11.52. The corresponding historical ratios are 8.55. 10.25 and 11.56. The current P/E Ratio is 6.72 based on a stock price of $8.53 and last 12 months EPS of $1.27. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $17.49. The 10 year low, median, and high median Price/Graham Price Ratios are 0.64, 0.73 and 0.82. The current P/GP Ratio is 0.49 based on a stock price of $8.53. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.22. The current P/B Ratio is 0.80 based on Book Value of $90.4M, Book Value per Share of $10.70 and a stock price of $8.53. The current P/B Ratio is some 35% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 2.62%. The current dividend yield is 4.22% based on dividends of $0.36 and a stock price of $8.53. The current yield is 61% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.35. The current P/S Ratio is 1.65 based on the last 12 months Revenue of $45.6M, Revenue per Share of $5.16 and a stock price of $8.53. The current ratio is 30% 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 probably relatively cheap. All the tests are showing this. Of note is that the stock price is below Book Value per Share. This strongly points to a cheap stock price.

Is it a good company at a reasonable price? I think that this is a good company. However, it is a small cap financial services company with little to no analysts following this stock. The thing that stands out is that the company seems to be slowing down. What would be nice to see is a dividend increases. This would signal that the company has confidence in the future. There is significant insider ownership with the chairman holding shares worth $17M and almost 24% of the outstanding shares.

When I look at analysts’ recommendations, I find one Buy recommendation on Market Watch. No other site gives any ratings that I could find.

See what analysts are saying on Stock Chase. A number of analysts talk about this being a well-run company. A writer on Simply Wall Street thinks this company deserves further attention. Blogger called Safety in Value on Seeking Alpha talks about this stock. Mark Bunting interviews CEO Simon Hitzig Small Cap Power.

Accord Financial Corp is a provider of asset-based financial services to businesses. Its asset-based financial services include asset-based lending, 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 Friday, September 13, 2019 around 5 pm. Tomorrow on my other blog I will write about Best Canadian Stocks.... learn more on Thursday, September 12, 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.

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