Is it a good company at a reasonable price? The price looks reasonable, if not cheap. It is a small company, so it is risky. However, it may do very well in the end. It is only a buy if you can accept the risk. Analysts are again expecting a good boost in Revenue this year. It did not happen last year, but we also have problems with the current pandemic.
I do not own this stock of Sylogist Ltd (TSX-SYZ, OTC-SYZLF). I learned about this stock from the newsletter I subscribe to.
When I was updating my spreadsheet, I noticed analysts expected the Revenue to increase by over 12% to 42.7M. However, it barely increased by 1.6% to $37.675M. It is also annoying that they do not provide financial statements on their site. Again, this year, the analysts expect a boost in Revenue by some 42%.
The debt ratios also deteriorated in 2021. The Liquidity Ratio went from 2.89 to 0.89 (and when below 1.00 it means that current assets cannot cover current liabilities). Even adding in Cash Flow after dividends the ratio is only 1.07. I like this to be at 1.50 or above. The median for the last 5 and 10 years were at 2.89 and 3.00.
The Debt Ratio, although still good at 1.91, it declined from 3.72 of the previous year. This ratio’s median for the last 5 and 10 years was at 3.88 and 3.72. Also, Leverage and Debt/Equity Ratios are worse. For 2021 they were 2.10 and 1.10. They were better in 2020 at 1.37 and 0.37. (For this ratio, lower is better.) These ratios have a median for the last 5 years at 1.37 and 0.37.
If you had invested in this company in December 1998, $1,000.35 you would have bought 117 shares at $8.55 per share. In December 2021, after 22 years you would have received $357.90 in dividends. The stock would be worth $1,508.13. Your total return would have been $1,866.03.
If you had invested in this company in December 2010, $1001.90 you would have bought 430 shares at $2.33 per share. In December 2021, after 10 years you would have received $1,294.30 in dividends. The stock would be worth $5,542.70. Your total return would have been $6,867.00.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $8.55 | $1,000.35 | 117 | 22 | $357.90 | $1,508.13 | $1,866.03 |
| $2.33 | $1,001.90 | 430 | 10 | $1,294.30 | $5,542.70 | $6,837.00 |
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.12%. The 5, 10 and historical dividend yields are also moderate all at 3.02%. The dividend growth is moderate (8% to 14% ranges) at 13.54% per year for the past 5 years. Although, I do not see how this will continue because of the high DPRs.
The Dividend Payout Ratios (DPR) are too high and are unsustainable. The DPR for EPS for 2021 is 278% with 5 year coverage at 120%. This is much too high, of course. The DPR for Cash Flow per Share is 76% with 5 year coverage at 65%. This rate is too high. I prefer one of 40% or less. The DPR for Free Cash Flow is 66% with 5 year coverage at 73%. There is disagreement on FCF, but not that significant.
Debt Ratios are mixed and the Liquidity Ratio needs improving. Although the Long Term Debt has increased significantly over the past year, the Long Term Debt/Market Cap Ratio is still 0.00. The Liquidity Ratio for 2021 is 0.89. If you add in Cash Flow after dividends it is still low at 1.07. I prefer this to be 1.50 or higher. The Current Liability/Asset Ratio is now at 0.39 and I would prefer this to be 0.20 or less. The Debt Ratio is good at 1.91. The Leverage Debt/Equity Ratios are fine at 2.10 and 1.10.
The Total Return per year is shown below for years of 5 to 22 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 13.54% | 8.05% | 4.51% | 3.54% |
| 2011 | 10 | 18.71% | 29.32% | 21.76% | 7.56% |
| 2006 | 15 | 20.55% | 25.41% | 20.46% | 4.95% |
| 2001 | 20 | 16.83% | 14.30% | 2.53% | |
| 1998 | 23 | 2.97% | 1.80% | 1.17% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 24.55, 29.03, and 34.13. The corresponding 10 year ratios are 24.24, 30.17 and 37.33. The corresponding historical ratios are 13.95, 19.5 and 23.66. The current P/E Ratio is 67.50 based on a stock price of $12.15 and EPS estimate for 2022 of $0.18. This ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. Problem is lack of estimated earnings. Analysts do not expect this company will make much in earnings this year and next.
I get a Graham Price of $2.81. The 10 year low, median, and high median Price/Graham Price Ratios are 2.15, 2.58 and 3.39. The current ratio is 4.32 based on a stock price of $12.50. The current ratio is above 10 year high median ratio. 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 4.84. The current P/B Ratio is 6.22 based on a Book Value of $46,.69M, Book Value per Share of $1.95 and a stock price of $12.15. The current ratio is 29% 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 18.21. The current P/CF Ratio is 15.59 based on stock price of $12.15, Cash Flow per Share for the last 12 months of $0.78 and Cash Flow of $18.62M. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.02%. The current dividend yield is 4.12% based on a stock price of $12.50 and dividends of $0.50. The current ratio is 36% 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 also of 3.02%. The current dividend yield is 4.12% based on a stock price of $12.50 and dividends of $0.50. The current ratio is 36% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 7.13. The current P/S Ratio is 5.27 based on a stock price of $12.15, Revenue estimate for 2021 of $55.1 and Revenue per Share of $2.31. The current ratio is 26% 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 probably cheap. The Dividend Yield tests are showing the stock price as cheap and this is confirmed by the P/S Ratio test. Some of the other tests are showing the stock price as expensive. Although, they have problem with increasing expenses and covering their dividends with earnings, the company will probably be fine in the end.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2). The consensus would be a Strong buy. The 12 month stock price is $17.31. this implies a total return of 46.58% with 42.47% from capital gains and 4.12% from dividends based on a stock price of $12.15.
When I looked at analysts’ recommendations last year, I found Strong Buy (1) and Buy (1). The consensus was a Strong Buy. The 12 month stock price consensus is $15.38. This implies a total return of 35.13% with 30.89% from capital gains and 4.26% from dividends based on a stock price of $11.75. What happened was a current stock price of $12.15 with a total return of 7.66% with 3.40% from capital gains and 4.26% from dividends.
Last year I thought that the stock price was probably reasonable, but they needed to get their DPR for EPS under control and analysts thought that they would in the short term. That was because they thought the company’s EPS would be increasing, but this did not happen. Of course, it has been a rough year because of the pandemic.
Most analysts on Stock Chase think this stock is a buy. Kay Ng on Motley Fool says with the new CEO the stock price is heading in the right direction. Christopher Liew on Motley Fool says that the company is a niche player and with the new CEO, long-term growth is on the horizon. The company talks about the fourth quarterly results for 2021 on Newsfile via Yahoo Finance. A Simply Wall Street Report on Yahoo Finance looks at the company’s debt. They have one warning sign of dividends not well covered by earnings.
Sylogist Ltd is a software company that provides Enterprise Resource Planning solutions, including fund accounting, grant management, and payroll to public service organizations. The only segment is Public Sector. Geographically, the company offers its services to the United States of America, Canada, and the United Kingdom region. The majority of the revenue comes from the United States of America. Its web site is here Sylogist Ltd.
The last stock I wrote about was about was Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) ... learn more. The next stock I will write about will be Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more on Friday, January 28, 2022 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios.... learn more on Thursday, January 27, 2022 around 5 pm.
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