I do not own this stock of Exco Technologies Ltd (TSX-XTC, OTC-EXCOF). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past.
When I was updating my spreadsheet, I noticed as a result the Company lost control of the Company’s indirect wholly owned subsidiary ALC Bulgaria EOOD (“ALC”) which filed for Liquidation in Bulgaria. This has affected sales and also some assets and liabilities. Hopefully, this is only a temporary setback for the company. Unfortunately, the stock price has been falling since 2015.
Also, the last dividend increase was for 5.6% in 2020. The one for 2019 was 5.9%. The one in 2018 was for 6.2%. The one for 2017 was 14.3%. This is pointing out that increases are getting lower. Dividend increases seem to reflect managements view of the future. A decreasing level of dividend increases would suggest a more negative view of the future.
This company started to pay dividends in 2003, some 16 years ago. Dividend yields started off low (under 2%), but because of dividend increases they became moderate (2% to 4% ranges). Lately they have been increasing due to the decline of the stock price. The current dividend yield is 4.71%. The 5, 10 and historical median dividend yields are 3.25%, 3.26% and 1.99%.
Dividend growth has been good until very recently. The dividend growth in the past up to the 16 years of dividends is shown below as the dividend growth per year. However, the last dividend increase, which was in 2020 was for only 5.6%. This would tend to indicate the lack of optimism for the near future on behalf of management to be lacking.
The Dividend Payout Ratios are fine except the DPR for EPS may be a little high. The DPR for EPS for 2019 is 55% with 5 year coverage at 32%. The 55% maybe little high for this sort of company. The DPR for CFPS is 26% with 5 year coverage at 20%. This is fine. The DPR for Free Cash Flow is 40% with 5 year coverage at 36%. The Dividend Coverage Ratio for 2019 is 2.52 with 5 year coverage at 2.78. Mostly, any ratio over 2.50 is fine.
Debt Ratios are all good. The Long Term Debt/Market Cap Ratio for 2019 is quite low and therefore good at 0.06. The Liquidity Ratio is high and good at 2.90 with 5 year median at 2.27. The Debt Ratio is high and good at 4.41 with 5 year median at 3.50. The Leverage and Debt/Equity Ratios are low and good at 1.29 and 0.29 respectively, with 5 year medians at 1.32 and 0.32.
The Total Return per year is shown below for years of 5 to 27 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 | 12.73% | -4.61% | -7.63% | 3.01% |
| 2009 | 10 | 17.63% | 20.03% | 14.77% | 5.26% |
| 2004 | 15 | 13.96% | 2.37% | 0.35% | 2.02% |
| 1999 | 20 | 13.03% | 4.99% | 3.17% | 1.82% |
| 1994 | 25 | 5.86% | 4.33% | 1.53% | |
| 1992 | 27 | 8.26% | 6.63% | 1.63% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.40, 13.17, and 15.68. The corresponding 10 year ratios are 8.62, 10.21 and 12.46. The corresponding historical ratios are 9.80, 13.34 and 15.73. The current ratio is 9.35 based on a stock price of $7.65 and 2020 EPS estimate of $0.82. This stock price testing suggests that the stock price is relatively reasonable and below the median if we use the 10 year ratios.
I get a Graham Price of $12.26. The 10 year low, median, and high median Price/Graham Price Ratios are 0.65, 0.78 and 0.94. The current P/GP Ratio is 0.62 based on a stock price of $7.65. 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 1.28. The current P/B Ratio is 0.94 based on Book Value of $328M, Book Value per Share of $8.15 and a stock price of $7.65. Th current ratio is 27% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.99%. The current dividend yield is 4.97% based on dividend of $0.38 and a stock price of $7.65. The current yield is 150% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.06%. The current dividend yield is 4.97% based on dividend of $0.38 and a stock price of $7.65. The current yield is 62% 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 0.80. The current P/S Ratio is 0.62 based on a stock price of $7.65, Revenue estimate for 2020 of $496 and Revenue per Share of $12.34. The current ratio is 23% below the 10 year 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 cheap. It is interesting that all the test except for the P/E Ratio test showed that the stock price is relatively cheap. However, if you compare the current P/E Ratio to the 5 year ratios and the historical ratios, the result is a relatively cheap stock price. This is one reason why I look at the other period ratios.
Is it a good company at a reasonable price? The stock price would seem to be on the cheap side, so it is reasonable. This company is in the automobile industry and this industry is probably changing. The company has been doing a reasonable job for its shareholders. It has good debt ratios and a good dividend yield. Analysts think that it will be picking up soon with Revenue and EPS. It could be a good company to invest in.
When I look at analysts’ recommendations, I find Buy (1), Hold (3) and Sell (1). The consensus would be a Hold. The 12 month stock price consensus is $8.70. This implies a total return of $18.69% based on a current stock price of $6.65 with 13.73% from capital gains and 4.97% from dividends.
See what analysts are saying on Stock Chase. They seemed to have stop following this stock in 2017 because of poor results. Debra Ray on Motley Fool thinks the stock should start to correct upwards next year or so. A writer on Simply Wall Street says that there are no major changes the analyst’s estimates with the second quarterly results of 2020. A writer on Simply Wall Street thinks this company is potentially undervalued..
Exco Technologies Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Its web site is here Exco Technologies Ltd.
The last stock I wrote about was about was AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more. The next stock I will write about will be Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more on Wednesday, February 5, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks February 2020.... learn more on February 4, 2020 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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