I do not own this stock of Pivot Technology Solutions (TSX-PTG, OTC-PVVTF). In a September 2020 Money Letter article, Margaret Samuel of Toronto-based Enriched Investing talks about 4 dividend paying tech stocks to buy. This is a stock I have not heard of before, so I decided to take a look at it. The article is here.
When I was updating my spreadsheet, I noticed that this company had a rough start. It only went public in 2011, but it has had two stock consolidations. It is a dividend paying stock and started dividends half way through 2015. However, it seems to have only turn profitable in 2019, but analysts think that over the next couple of years, it will have a profit.
There was some insider buying during the past year. The purchase price seems to be around $1.55 and $1.75 for insider buying. However, this buying happens some months ago.
The dividend yields are good with not much in dividend growth. The current yield is good (5% and 6% ranges) at 6.18%. Dividends have only been paid for 4 years, so the 4 year median dividend yield is high (7% or higher) at 8.65%. They did an increase in dividends from $0.03 to $0.04 (33%) after paying the first dividend in 2015. However, dividends have not changed since. Analysts do not expect an increase in the near future.
The Dividend Payout Ratios (DPR) will probably improve. The DPR for EPS for 2019 is 46% with 5 year coverage at 1750%. They haven’t often made a profit, although analyst expect that to change. The DPR for CFPS is 70% with 5 year coverage at 50%. I cannot calculate the DPR for Free Cash Flow for 2019 because the FCF is negative. The 5 year coverage is 15%.
Debt Ratios need improving. They have no long term debt, so the Long Term Debt/Market Cap Ratio is 0.00. The Liquidity Ratio has never been good and for 2019 it is 0.85. Add in Cash Flow after dividends and it is lower at 0.83, then add in current portion of the long term debt it is 0.97. This means that the current assets cannot cover the current debt. The Debt Ratio is also low at 1.04. I prefer this to be at 1.50 or higher.
The Total Return per year is shown below for years of 5 to 9 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 | 7.46% | 33.46% | 19.40% | 14.06% |
| 2010 | 9 | -14.10% | -16.80% | 2.70% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 8 year ratios are negative. The corresponding historical ratios are negative. The current P/E Ratio is 21.58 based on a stock price of $2.59 and EPS estimate for 2020 of $0.12. This testing cannot be done with negative P/E Ratios. However, a P/E Ratio is 21.58 is rather on the high side.
I estimate a Graham Price of $1.00. The 8 year low, median, and high median Price/Graham Price Ratios are 1.01, 1.71 and 2.32. The current P/GP Ratio is 2.58 based on a stock price of $2.59. This stock price testing suggests that the stock price is relatively expensive.
I get an 8 year median Price/Book Value per Share Ratio of 2.86. The current P/B Ratio is 6.96 based on a Book Value of $14,213M, Book Value per Share of $0.37 and a stock price of $2.59. The current P/B Ratio is 143% above the 8 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an 8 year median Price/Cash Flow per Share Ratio of 1.41. The current P/CF Ratio is negative based on negative Cash Flow for last 12 months of $16.8M, negative Cash Flow per Share of $0.44, and a stock price of $2.59. This test cannot be done due to negative cash flow.
If we look at the 8 year median Price/Cash Flow per Share Ratio excluding working capital, the 8 year median P/CF per Share Ratio is 5.54. The current P/C Ratio is 7.48 based on Cash Flow for last 12 months of $13.2M, Cash Flow per Share of $0.35 and a stock price of $2.59. The current P/CF Ratio is 35% above the 8 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical (and 8 year) median dividend yield of 8.65%. The current dividend yield is 6.18% based on dividends of $0.16 and a stock price of $2.59. The current yield is 29% below the 8 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 8 year median Price/Sales (Revenue) Ratio is 0.04. The current P/S Ratio is 0.09 based on a stock price of $2.59, Revenue estimate for 2020 of $1,106M and Revenue per Share of $28.94. The current ratio is 111% above the 8 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 probably relatively expensive. The dividend yield shows this result and it is confirmed by the P/S Ratio test. Also, the stock price testing I can do shows that the stock price is relatively expensive.
Is it a good company at a reasonable price? It would seem that the current stock price is relatively expensive. However, the trouble with small tech companies is that they can be overpriced for long periods of time. They are generally not a buy and hold forever because of this, but on the other hand they may never be priced at a current reasonable price. You can overpay for tech stocks and still make money, but you have to keep a close eye on them.
When I look at analysts’ recommendations, I find that both WSJ and Yahoo Finance show a Buy (1). The target price is 1.82. This implies a total earnings loss of 23.55% with a capital loss of $29.73 and dividends of 6.18%.
There are no recent reviews of this stock on Stock Chase. With the entries there, opinions are mixed. A writer on Simply Wall Street last year talks about insider buying. There is an interesting note on Reddit about Motley Fool’s recommendations, including this company. The executive overview on Simply Wall Street gives this stock 3 stars out of 5 and lists a number of risks. A writer on Simply Wall Street gives a good overview of this stock.
Pivot Technology Solutions Inc offers IT solutions to businesses, government, education, and healthcare organizations. It operates through the following segments: ACS, ARC, ProSys, Sigma, TeraMach, Shared services. Its web site is here Pivot Technology Solutions.
The last stock I wrote about was about was Dollarama Inc (TSX-DOL, OTC-DLMAF) ... learn more. The next stock I will write about will be Keyera Corp (TSX-KEY, OTC-KEYUF) ... learn more on November 06, 2020 around 5 pm. Tomorrow on my other blog I will write about Something to Buy November 2020.... learn more on Thursday, November 05, 2020 around 5 pm.
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