Is it a good company at a reasonable price? The current price is certainly good. When you buy at a good price, shareholders have done well. Also, the financial year ending September 30, 2021 was a relatively good year for this company.
I do not own this stock of Exco Technologies Ltd (TSX-XTC, OTC-EXCOF). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past.
When I was updating my spreadsheet, I noticed that 10 year growth is good, but 5 year growth is not. Revenue grew 8.73% in the last 10 years, but is down by 4.78% over the past 5 years. EPS grew 10.53% over the past 10 years, but is down by 2.46% over the past 5 years. Cash Flow grew 21.82% over the past 10 years, but is down by 6.10% over the past 5 years.
The stock price has run parallel in that the stock price is up by 16.30% per year over the past 10 years, but is down by 0.75% over the past 5 years. The company seemed to hit a high around 2017 and values have been falling since then. They have started to make a recover in 2021.
If you had invested in this company in December 2010, $1001.25 you would have bought 267 shares at $3.75 per share. In December 2021, after 10 years you would have received $768.29 in dividends. The stock would be worth $2752.77. Your total return would have been $3521.06.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.75 | $1,001.25 | 267 | 10 | $768.29 | $2,752.77 | $3,521.06 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.15%. The 5, 10 and historical dividend yield are moderate at 4.10%, 3.20% and 2.80%. The dividends have been growing at a low rate (under 8%) at 7.9% per year over the past 5 years. The last dividend increase was in 2021 and it was for 4.26%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 was 40% with 5 year coverage at 41%. The DPR for Cash Flow per Share for 2021 was 25% with 5 year coverage at 24%. The DPR for Free Cash Flow for 2021 was 165% with 5 year coverage at 45%.
Debt Ratios are good. The company current has no long term debt so the Long Term Debt/Market Cap Ratio is 0.00. The Liquidity Ratio for 2021 is 2.60. The Debt Ratio is 5.06. The Leverage and Debt/Equity Ratios for 2021 are 1.25 and 0.25.
The Total Return per year is shown below for years of 5 to 31 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 | 7.91% | 2.44% | -0.89% | 3.33% |
| 2011 | 10 | 14.17% | 17.05% | 12.24% | 4.81% |
| 2006 | 15 | 14.77% | 9.88% | 6.94% | 2.95% |
| 2001 | 20 | 12.17% | 7.55% | 5.37% | 2.19% |
| 1996 | 25 | 5.80% | 4.22% | 1.57% | |
| 1991 | 30 | 12.48% | 10.47% | 2.01% | |
| 1990 | 31 | 12.59% | 10.63% | 1.96% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.84, 9.61 and 12.61. The corresponding 10 year ratios are 8.50, 9.89 and 12.64. The corresponding historical ratios are 8.68, 12.49 and 15.68. The current P/E Ratio is 7.65 based on a stock price of $9.64 and EPS estimate for 2022 of $1.26. the current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $15.38. The 10 year low, median, and high median Price/Graham Price Ratios are 0.65, 0.78 and 0.94. The current P/GP Ratio is 0.63 based on a stock price of $9.64. The current ratio is below the low of the 10 year median ratio. 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 1.28. The current P/B Ratio are 1.16 based on a stock price of $9.64, Book Value of $328M, and Book Value per Share of $8.34. The current P/B Ratio is 10% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 7.82. The current P/CF Ratio is 7.09 based on Cash Flow per Share estimate for 2022 of $1.36, Cash Flow of $53.4 and a stock price of $9.64. The current ratio is 9.4% 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 2.80%. The current dividend yield is 4.15% based on a stock price of $9.64 and Dividends of $.40. The current dividend yield is 48% 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 of 2.80%. The current dividend yield is 4.15% based on a stock price of $9.64 and Dividends of $.40. The current dividend yield is 30% 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 0.80. The current P/S Ratio is 0.69 based on as stock price of $9.64, Revenue estimate for 2022 of $552M and Revenue per Share of $14.06. 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.
Results of stock price testing is that the stock price is the stock price is reasonable and below the median and maybe even cheap. Both dividend yield tests show the stock price as being cheap. The P/S Ratio test is showing the stock price as being reasonable and below the median. All the other tests are showing the stock price as either cheap or reasonable and below the median.
I look at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios and P/S Ratios are currently relatively low. Also, the beginning yields was lower than today.
In the following chart the capital gains for the 10 years to September 30, 2021 is 12.24% per year. The beginning yield was at 3.14%, and the P/E Ratio and the P/S Ratio were at 9.03 and 0.69. Does this chart change my opinion of the stock price? No, as the P/E Ratio and P/S Ratios are relatively low today and the dividend yield is relatively high.
| # Years | Cap Gains | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | -0.89% | 9.71 | 0.87 | 2.23% |
| 10 | 12.24% | 9.03 | 0.69 | 3.14% |
| 15 | 6.94% | -377.00 | 0.79 | 1.25% |
| 20 | 5.37% | 16.19 | 0.62 | |
| 25 | 4.22% | 24.44 | 1.74 | |
| 30 | 10.47% | |||
| 31 | 10.63% | |||
| current | 7.65 | 0.69 | 4.15% |
When I look at analysts’ recommendations, I find Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $13.13. This implies a total return of 40.35% with 36.20% from capital gains and 4.15% from dividends based on a current stock price of $9.64.
This stock is not covered well on Stock Chase, but recent entry says to buy on weakness. Aditya Raghunath on Motley Fool thinks now is the time to buy this stock. Ambrose O'Callaghan on Motley Fool also think that you should buy this dividend stock. A Simply Wall Street report on Yahoo Finance talks about the CEO’s compensation package. A Simply Wall Street Report on Yahoo Finance talks about who owns shares in this company.
Exco Technologies Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Geographically, it derives a majority of revenue from the United States. Its web site is here Exco Technologies Ltd.
The last stock I wrote about was about was Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more. The next stock I will write about will be Absolute Software Corporation (TSX-ABST, NASDAQ-ABST) ... learn more on Friday, February 4, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy February 2022.... learn more on Thursday, February 03, 2022 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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