I do not own this stock of Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF). This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend. It went public in 1995. It financial year end is October 31 each year.
When I was updating my spreadsheet, I noticed that the dividends increase for 2019 was very good at 22.2%. The stock price went up 45% in 2019 and is up 7.6% so far this year.
They started to pay dividends in 2008, 11 years ago. The dividend yields are low (under 2%) with the current yield at 0.85% and 5, 10 historical dividend yields at 0.98%, 1.12% and 1.24%. Dividend growth has been good (15% or higher). See chart below.
The Dividend Payout Ratios are good. The DPR for EPS for 2019 is 31% with 5 year coverage at 32%. The DPR for CFPS for 2019 is 18.5% with 5 year coverage at 17.4%. The DPR for Free Cash Flow for 2019 was 27.6% with 5 year coverage at 22.7%. Dividend Coverage Ratio is 4.40.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.00 because long term debt is so low (i.e. too low to register). The Liquidity Ratio is fine at 1.53. The Debt Ratio is good at 3.13. The Leverage and Debt/Equity Ratios are good at 1.47 and 0.47 for 2019.
The Total Return per year is shown below for years of 5 to 24 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 17.32% | 19.38% | 18.36% | 1.02% |
| 2009 | 10 | 21.95% | 28.96% | 27.48% | 1.47% |
| 2004 | 15 | 20.81% | 17.88% | 17.18% | 0.69% |
| 1999 | 20 | 18.75% | 18.20% | 0.54% | |
| 1995 | 24 | 16.15% | 15.75% | 0.40% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 26.42, 32.85 and 40.27. The corresponding 10 year ratios are 24.43, 28.44 and 32.09. The corresponding historical ratios are 17.25, 20.76 and 26.52. The current P/E Ratio is 39.26 based on a stock price of $51.82 and 2020 EPS estimate of $1.32. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $14.77. The 10 year low, median, and high median Price/Graham Price Ratios are 2.04, 2.37 and 2.70. The current P/GP Ratio is 3.51 based on a stock price of $51.82. 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 4.46. The current P/B Ratio is 7.03 based on a stock price of $51.82., Book Value of $402M and Book Value per Share of $7.35. The current ratio is some 58% 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 1.24%. The current dividend yield is 0.85% based on dividends of $0.44 and a stock price of $51.82. The current yield is 32% above the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median dividend yield is 1.12%. The current dividend yield is 0.85% based on dividends of $0.44 and a stock price of $51.82. The current yield is 24% above the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 4.26. The current P/S Ratio is 5.55 based on 2020 Revenue estimate of $511M, Revenue per Share of $9.34 and a stock price of $51.82. The current ratio is 30% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is relatively expensive. All the test that I have done show exactly the same thing.
Is it a good company at a reasonable price? I find this company quite interesting. It has done well for its shareholders. At the moment it is relatively expensive. I have this stock on my list of stocks to look at for buying purposes in case of a bear market. The current dividend yield is below 1% and I do not buy stocks with dividend yields currently lower than 1%.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (1). The consensus would be a Buy. The 12 months stock price consensus is $56.80. This implies a total return of 10.46% with 9.61% from capital gains and 0.85% from Dividends. I think that the target price undermines the Buy recommendation. On a high flying tech stock, you expect capital gains in one year to be much higher than 9.6%.
See what analysts are saying on Stock Chase. Analyst are impressed with this company. Christopher Liew on Motley Fool thinks this stock will continue in its winning ways this year. A writer on Simply Wall Street talks about analysts upgrades for this company. A writer on Simply Wall Street says the company’s ROCE looks good. Martin Roberts on The Enterprise Leader talks about some insider selling and recent analysts’ reports..
Enghouse Systems Ltd is a Canada-based provider of software and services to a variety of end markets. The firm's operations are organized in two segments namely, the Interactive Management Group and the Asset Management Group. The firm has operations in Canada, the United States, the United Kingdom, France, Germany, Sweden, Israel, Croatia, Denmark, Norway, India, Japan, Hong Kong, Singapore, and Australia etc. Its web site is here Enghouse Systems Ltd .
The last stock I wrote about was about was Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more. The next stock I will write about will be Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more on January 29, 2020 around 5 pm. Tomorrow on my other blog I will write Banks and Other Things .... learn more on Tuesday, January 28, 2020 around 5 pm.
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