I own this stock of TECSYS Inc (TSX-TCS, OTC-TCYSF). I came across this stock when I was looking for a dividend paying small cap stock as a filler stock. I consider a filler stock to be one to soak up small amounts of investment money that I have left over in my account, especially in the TFSA after I have made my main purchase for the year. This is a small cap dividend paying stock that I like.
When I was updating my spreadsheet, I noticed David Brereton is the founder and Chair. He has been selling off some of his shares each year and has been doing this for awhile. Of the ones I looked at, the only one buying was the CFO, Mark Joseph Bentler. He is not a Brereton as there are a few Brereton’s at this company. The Debt Ratios are good.
The dividend yields are low with dividend growth good. The dividend yields have often been low (below2%), with the current yield at 0.80% and 5, 10 and historical yields at 1.28%, 1.42% and 1.53%. In the past the dividend increases have been good. See chart below.
The Dividend Payout Ratios (DPR) are currently a bit too high, but I expect this will be corrected. The DPR for EPS for 2020 is 128% with 5 year coverage at 66%. The DPR for 2020 is 45% with 5 year coverage at 47%. The DPR for Free Cash Flow for 2020 is 34% with 5 year coverage at 44%. Dividend Coverage Ratio is 2.95 with 5 year coverage at 2.30.
Debt Ratios are good. The Long Term Debt/Market Cap for 2020 is 0.03. The Liquidity Ratio for 2020 is 1.56. The Debt Ratio for 2020 is 1.97. The Leverage and Debt/Equity Ratios are 2.04 and 1.04.
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 | 20.64% | 23.10% | 21.71% | 1.38% |
| 2009 | 10 | 16.49% | 28.27% | 26.42% | 1.86% |
| 2004 | 15 | 15.69% | 20.59% | 19.38% | 1.21% |
| 1999 | 20 | 5.67% | 5.27% | 0.40% | |
| 1998 | 21 | 9.94% | 9.46% | 0.48% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.67, 20.68 and 24.69. The corresponding 10 year ratios are 20.68, 27.23 and 33.78. The corresponding historical ratios are 11.24, 13.24 and 16.46. The current P/E Ratio is 136.36 based on a stock price of $30.00 and 2021 EPS estimate of $0.22. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $4.58. The 10 year low, median, and high median Price/Graham Price Ratios are 1.50, 1.98 and 2.52. The current P/GP Ratio is 6.55 based on a stock price of $30.00. 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 3.74. The current P/B Ratio is 7.08 based on a Book Value of $61M, Book Value per Share of $4.24 and a stock price of $30.00. The current P/B Ratio is 89% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 20.73. The current P/CF Ratio is 43.22 based on Cash Flow for the last 12 months of $10M, Cash Flow per Share of $0.69 and a stock price of $30.00. The current ratio is 109% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.53%. The current dividend yield is 0.80% based on dividends $0.24 and a stock price of $30.00. The current yield is 48% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.42%. The current dividend yield is 0.80% based on dividends $0.24 and a stock price of $30.00. The current yield is 44% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.60. The current P/S Ratio is 3.73 based on a stock price of $30.00, 2021 Revenue estimate of $116M, and Revenue per Share of $8.05. The current ratio is 133% 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. The Dividend Yield tests show this and are confirmed by the P/S Ratio test. All the test, in fact, show the same thing. I can find no fault with them. However, a lot of the ratios are quite high, relatively speaking.
Is it a good company at a reasonable price? I own this stock and think it is a great company. I know that it is overpriced but I will not be selling. I do not sell a good company because it gets over price. I do not time the market. Although, neither will I be buying more at the present time.
When I look at analysts’ recommendations, I find Strong Buy (1), and Buy (3). The consensus would be a Buy. The 12 month stock price consensus is $34.50. This implies a total return of 15.80% with 0.80% from dividends and 15% from capital gains.
The last entry shows this company as a top pick, but few analysts follow this company on Stock Chase. Brian Paradza, on Motley Fool says this company could be the next Shopify. A writer on Simply Wall Street says he is worried about declining net income. A writer on Simply Wall Street says that earnings cannot cover dividends, but they are affordable from a cash perspective. A report on Newswire talks about this company earning over $100M for the first time..
TECSYS Inc is engaged in the development and sale of enterprise supply chain management software for distribution, warehousing, transportation logistics, point-of-use, and order management. Geographically, it derives a majority of revenue from the United States and also has a presence in Canada and other Countries. Its web site is here TECSYS Inc.
The last stock I wrote about was about was Pulse Seismic Inc (TSX-PSD, OTC-PLSDF) ... learn more. The next stock I will write about will be Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more on Wednesday, July 29, 2020 around 5 pm. Tomorrow on my other blog I will write about Visual Capitalist.... learn more on Tuesday, July 28, 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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