I do not own this stock of Pulse Seismic Inc (TSX-PSD, OTC-PLSDF). I wanted to invest some extra money in a dividend paying small cap. I went to the Globe and Mail site of G&M and from Globe Investor section I selected the Stock Filter. I asked for companies that were priced between $1 and $5.50 and had a yield between 4% and 20%. Pulse Seismic Inc. was one of the companies that were returned. This is not a stock I chose to invest in but I found it of interest so I am following it.
When I was updating my spreadsheet, I noticed that there is lots of insider buying. There is buying by the CEO, CFO and Chairman. It used to be a dividend growth stock, but cut its dividends in 2015 because of lack of earnings. However, they did give out a special dividend in 2017 when they made a profit. Problem is that they service the energy business in the west so they are currently not earning much. The stock peaked in 2013 and has been going south ever since.
They have a very mixed record in regards to dividends. Dividend have gone up and down. They were suspended in 2015, but this was not the first time. They also made a special dividend in 2017 because they made a profit that year.
The Dividend Payout Ratios (DPR) show a mixed record. However, they have suspended dividends when they would not afford them. In 2017 they made a profit so gave out a dividend that was 74% DPR of EPS and 19% of CFPS. Morningstar and Wall Street Journal do not agree on what the Free Cash Flow is, however, according to Morningstar they paid out 29% of FCF in 2017.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is 0.29 and that is good. It is still good at 0.57 for a current value. Debt went down, but so did the stock price. The Liquidity Ratio for 2019 is 1.11 and if you add in cash flow after dividends it is 2.72. The current Liquidity Ratio is 0.79 and with cash flow is 1.65. The Debt Ratio for 2019 is 1.85. Leverage and Debt/Equity Ratio for 2019 is 2.18 and 1.18 and these are also fine.
The Total Return per year is shown below for years of 5 to 21 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 | 0.00% | -5.88% | -7.92% | 2.04% |
| 2009 | 10 | 0.00% | 7.97% | 4.58% | 3.39% |
| 2004 | 15 | 0.00% | 5.08% | 0.73% | 4.35% |
| 1999 | 20 | 10.02% | 4.87% | 5.15% | |
| 1998 | 21 | 13.88% | 7.50% | 6.38% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 10 year ratios are also negative. The corresponding historical ratios are 2.83, 4.57 and 5.71. The current P/E Ratio is 3.03 based on a stock price of $0.91 and 2020 EPS estimate of 0.30. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $2.11. The 10 year low, median, and high median Price/Graham Price Ratios are 1.13, 1.35 and 1.59. The current P/GP Ratio is 0.43 based on a stock price of $0.91. 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 3.40. The current P/B Ratio is 1.38 based on a stock price of $0.91, Book Value of $35.475M, and Book Value per Share of $0.66. The current ratio is 59% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.38. The current P/CF Ratio is 8.28 based on last 12 months Cash Flow of $5.9M, Cash Flow per Share of $0.11 and a stock price of $0.91. The current ratio is 54% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do any dividend yield testing as the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 5.25. The current P/S Ratio is 4.08 based on 2020 Revenue estimate of $12M, Revenue per Share of $0.22 and a stock price of $0.91. The current ratio is 22% 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 relatively cheap. The P/S Ratio test shows this and it is confirmed by the P/B Ratio test. The P/CF test shows this as well. The problem with the P/E Ratio testing is all the years of earning losses. This would also affect the Graham Price as some guessing goes into its calculation so it might be off.
Is it a good company at a reasonable price? First, the stock price is relatively cheap. I still think this is an interesting company and if resources ever pick up again it will do well. However, it is highly speculative.
When I look at analysts’ recommendations, I find Buy (1). The consensus would be a buy. The 12 month target price is $1.40. This implies a total return of 53.85% all from capital gains.
This is a small company and there is only old comments on Stock Chase. Stock is not well followed. See the executive overview on Simply Wall Street. A writer on Simply Wall Street is a bit worried about the debt of this company. A writer on Simply Wall Street says the consensus on this stock has turned bearish. A writer on Simply Wall Street says that the CEO is being paid more then the median for this size of a company. The company reports on the Second Quarter of 2020 on Global News Wire
Pulse Seismic Inc is a Canadian company which acts as a provider of seismic data to the energy sector in western Canada. The company is engaged in the acquisition, marketing, and licensing of 2D and 3D seismic data to the energy sector. Its web site is here Pulse Seismic Inc .
The last stock I wrote about was about was Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more. The next stock I will write about will be TECSYS Inc (TSX-TCS, OTC-TCYSF) ... learn more on Monday, July 27, 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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