I own this stock of Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF). I bought this company in 2008 because it is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. It has great growth and it is information technology a favourite sector of mine. Because the stock grew rapidly and because it is a tech stock, I sold some shares in 2011 to lock in profit.
When I was updating my spreadsheet, I noticed that I have done well with this stock, earning 20% per year over the 13 years I have held this stock. However, the stock has not done well recently with a negative total return of 12% per year over the past 5 years and a total return of just 3.6% per year over the past 10 years. This is not surprising as this company services the oil and gas industry. The stock hit a high in 2014 and is down some 67% from this high. This stock has a year end of March 31 each year, so I am currently looking at the March 31, 2021 year end.
The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4% ranges) at 3.68%. The 5, 10 and historical dividend yields are also moderate at 4.52%, 3.73% and 3.66%. The dividends hit a high in 2014, were flat for awhile and then declined in 2021. When the oil and gas industry recovers, we should see some benefit for the shareholders of this stock.
The Dividend Payout Ratios (DPR) are still too high, but the company does have lots of cash. The DPR for EPS for 2021 was 80% with 5 year coverage at 130%. The DPR for CFPS for 2021 was 61% with 5 year coverage at 86%. The DPR for Free Cash Flow for 2021 is 80% with 5 year coverage at 137%.
Debt Ratios are fine. The company has no long term debt. The Liquidity Ratio is good at 1.92. The Debt Ratio is good at 1.55. The Leverage and Debt/Equity Ratios are fine at 2.82 and 1.82.
The Total Return per year is shown below for years of 5 to 24 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -12.94% | -12.38% | -16.59% | 4.21% |
| 2010 | 10 | 0.38% | 3.55% | -2.77% | 6.32% |
| 2005 | 15 | 14.87% | 25.89% | 11.81% | 14.08% |
| 2000 | 20 | 15.48% | 44.24% | 22.82% | 21.42% |
| 1996 | 24 | 18.04% | 11.28% | 6.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.45, 26.41 and 32.96. The corresponding 10 year ratios are 20.34, 28.93 and 33.96. The corresponding historical ratios are 10.89, 17.09 and 21.11. The current ratio is 23.61 based on a stock price of $5.43 and EPS estimate for 2022 of $0.23. This ratio is between the low and median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $1.67. The 10 year low, median, and high median Price/Graham Price Ratios are 3.15, 4.04 and 4.86. The current P/GP Ratio is 3.25 based on a stock price of $5.43. This ratio is between the low and the median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 12.69. The current P/B Ratio is 10.04 based on a Book Value of 43.4M, Book Value per Share of $0.54 and a stock price of $5.43. The current ratio is 21% below the 10 year median ratios. 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 24.13. The current P/CF Ratio is 14.68 based on Cash Flow per Share estimate for 2022 of $0.37, Cash Flow of $29.7M and a stock price of $5.43. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.66%. The current dividend yield is 3.68% based on dividends of $0.20 and a stock price of $5.43. The current yield is 0.6% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median dividend yield of 3.73%. The current dividend yield is 3.68% based on dividends of $0.20 and a stock price of $5.43. The current yield is 1.3% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 10.39. The current P/S Ratio is 6.60 based on Revenue estimate for 2022 of $66.1M, Revenue per Share of $0.82 and a stock price of $5.43. The current ratio is 37% below the 10 year median. 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. The dividend yield tests are showing the stock price at the median, but the dividend was cut by 50% in 2021. The P/S Ratio is showing the stock price as cheap as is a lot of the other tests.
Is it a good company at a reasonable price? I think the stock price is reasonable and probably cheap. I am still interested in this company which I own. There is, of course, a problem as it services the oil and gas industries and eventually, these industries will die. Although this will take a lot longer than anyone imagines. The plus side is that they are in a lot of countries, not just Canada.
When I look at analysts’ recommendations, I find Buy (4) and Hold (3). The consensus would be a Buy. The 12 month stock price is $6.64. This implies a total return of $25.97% with 22.28% from capital gains and 3.68% from dividends.
The analysts on Stock Chase last updated on this company in 2017. So, analysts have lost interest in this stock. Jitendra Parashar on Motley Fool thinks this stock is currently an amazing buy. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. A writer on Simply Wall Street wonders if the dividend is sustainable. A writer on Simply Wall Street thinks that this company is overpriced because he thinks the fair price is $4.00 CDN$.
Computer Modelling Group Ltd is a Canada-based provider of reservoir simulation software for the oil and gas industry. The firm has operations in over 60 countries in the Americas, Europe, Middle East, Africa, and Asia-Pacific regions. Its web site is here Computer Modelling Group Ltd.
The last stock I wrote about was about was CI Financial Corp (TSX-CIX, OTC-CIFAF) ... learn more. The next stock I will write about will be Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... learn more on Monday, June 28, 2021 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment