I do not own this stock of Pason Systems Inc (TSX-PSI, OTC-PSYTF). I read a report on this stock in the Buy and Sell Advisor in September 2013. I had not heard of this dividend growth company before so I decided to investigate it.
When I was updating my spreadsheet, I noticed both revenue and EPS are higher than estimates. Revenue estimate was $297M and it came in as $306M. EPS estimate was $0.60 and it came in as $0.73. However, the estimates for Revenue for 2019 and 2020 were $319M and $344M last year, but have been lowered this year to $296M and $291M. The estimates for EPS have also been lowered. Last year estimates for 2019 and 2020 were of $0.77and $1.01. This year estimates for 2019 and 2020 are $0.76 and $0.86.
This stock has very good debt ratios which is very good. A negative is the non-existent growth in Book Value. They started to raise the dividends again in 2018.
This company started to pay dividends in 2003. They did a 50% increase in 2013. Since then, there has been no increase or low increases. The most recent increase was for 5.6% and it occurred in 2019. See dividend increases per year in chart below for the 5, 10 and 15 year periods.
The dividend yields in the past were low (under2%), but recently they have been moderate (2% to 4% ranges). The current dividend yield is 4.96%, with 5, 10 and historical dividend yields at 3.56%, 2.98% and 2.38%.
The Dividend Payout Ratios are currently too high, but are improving. The DPR for EPS for 2018 is 96% with 5 year coverage at 195%. The DPR for 2019 is expected to be 97%. The DPR for CFPS for 2018 is 47% with 5 year coverage at 50%.
Debt Ratios are very good. The Long Term Debt/Market Cap Ratio for 2018 is 0.00. (It is too low to get a ratio.). The Liquidity Ratio for 2018 is 5.82 with 5 year median also at 5.82. The Debt Ratio for 2018 is 6.10 with 5 year median at 7.82. The Leverage and Debt/Equity Ratios for 2018 are 1.20 and 0.20 respectively with 5 year medians at the same value.
The Total Return per year is shown below for years of 5 to 22 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.
The stock price is down again this year and it is down year to date by 16%.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 2.13% | -1.27% | -4.46% | 3.19% |
| 2008 | 10 | 13.93% | 5.88% | 2.67% | 3.21% |
| 2003 | 15 | 19.18% | 10.46% | 7.36% | 3.09% |
| 1998 | 20 | 21.65% | 17.47% | 4.18% | |
| 1996 | 22 | 21.12% | 17.41% | 3.70% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.86, 21.00 and 26.15. The corresponding 10 year ratios are 19.22, 23.89 and 28.55. The corresponding historical ratios are 13.33, 19.64 and 24.27. The current 20.16 based on a stock price of $15.32 and 2019 EPS estimate of $0.76. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $8.77. The 10 year low, median, and high median Price/Graham Price Ratios are 1.85, 2.23 and 2.64. The current P/GP Ratio is 1.75 based on a stock price of $15.32. 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 3.62. The current P/B Ratio is 3.41 based on Book Value of $386M, Book Value per Share of $4.50 and a stock price of $15.32. The current ratio is 5.8% lower than 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 2.38%. The current dividend yield is 4.96% based on dividends of $0.76 and a stock price of $15.32. The current dividend is 108% 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 5.09. The current P/S Ratio is 4.12 based on 2019 Revenue estimate of $296M, Revenue per Share of $3.45 and a stock price of $15.32. The current ratio is 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is cheap to reasonable. My testing is showing the stock price as either cheap or below the median. I do not see any particular problem with any of the above tests.
Is it a good company at a reasonable price? This company supports companies in the oil and gas industry and therefore is of a high risk. Sometimes these support companies do better than companies producing oil and gas. The price seems to be from cheap to reasonable.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (1). The consensus would be a Buy. The 12 month stock price is $20.10. This implies a total return of 36.16% with 31.20% from capital gains and 4.96% from dividends based on a current price of $15.32.
See what analysts are saying on Stock Chase . There are few entries with the most recent one being positive. Ambrose O'Callaghan on Motley Fool thinks this is current a good dividend stock to buy. A writer on Simply Wall Street talks about institutional ownership. A writer on Simply Wall Street thinks this company can afford their dividends. A JWN staff JWN Energy talks about this company buying a stake in a technology company.
Pason Systems Inc is an oilfield specialist with fully integrated drilling data solutions. A host of products allow customers to collect, manage, report, and analyze drilling data for performance optimization and cost control. The company operates in three geographic segments: Canada, the United States, and International (Latin America, Offshore, the Eastern Hemisphere, and the Middle East). Its web site is here Pason Systems Inc.
The last stock I wrote about was about was North West Company (TSX-NWC, OTC-NWTUF) ... learn more. The next stock I will write about will be Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more on Monday, October 28, 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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