Is it a good company at a reasonable price? The stock price could be cheap. It is certainly reasonable. I am retaining the stock I have as I have not lost faith in this company. I would like to see what the new CEO and Chairman do.
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. Insiders are currently buying this stock. It has great growth and it is information technology a favourite sector of mine. When I sold some of my TD Bank stock in June 2009, I bought some more. 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 made 20.18% per year with 10.01% from capital gains and 17.17% from dividends over the past 14 years. However, the stock hit a high in 2015 at $15.56 which has never been matched. The current stock price is $4.61. I know everything seems to be declining this year, but the stock was down to $6.38 at the start of this year.
This company has recently changed both the CEO and Chairman. Will the company do better because of this? Note that this company has a year-end at March 31 each year. So, in this entry I am dealing with March 31, 2022 financial statements.
If you had invested in this company in December 2011, $1005.43 you would have bought 131 shares at $7.68 per share. In December 2021, after 10 years you would have received $466.36 in dividends. The stock would be worth $558.06. Your total return would have been $1024.42.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.68 | $1,005.43 | 131 | 10 | $466.36 | $558.06 | $1,024.42 |
The dividend yields are moderate with dividend growth non-existent. The current yield is moderate (2% to 4% ranges) at 4.15%. The 5, 10 and historical dividend yields are also moderate at 4.52%, 3.91% and 3.73%. The dividends were cut in 2021 and they have been flat ever since. It is expected that Dividend Payout Ratio will decline to 74% in 2023 and they have a new CEO and Chairman, so I am hoping for an improvement in this stock.
The Dividend Payout Ratios (DPR) are too high, but are expected to decline. The DPR for EPS for 2022 is 100% with 5 year coverage at 125%. The DPR for Cash Flow per Share for 2022 is 67% with 5 year coverage at 83%. The DPR for Free Cash Flow for 2022 is 62% with 5 year coverage at 113%.
Debt Ratios are good. The Long Term Debt/Market Cap for 2022 is very low at 0.01. The Liquidity Ratio for 2022 is good at 2.03. The Debt Ratio for 2022 is good at 1.60. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.68 and 1.68.
The Total Return per year is shown below for years of 5 to 25 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 | -12.94% | -9.49% | -14.10% | 4.61% |
| 2011 | 10 | -1.17% | 0.24% | -5.72% | 5.96% |
| 2006 | 15 | 12.06% | 20.89% | 7.78% | 13.11% |
| 2001 | 20 | 14.50% | 47.68% | 20.94% | 26.74% |
| 1996 | 25 | 17.66% | 10.21% | 7.45% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.30, 24.90 and 30.50. The corresponding 10 year ratio 19.71, 28.93 and 33.96. The corresponding historical ratios are 11.56, 17.47 and 21.88. The current P/E Ratio is 17.85 based on a stock price of $4.82 and EPS estimate for 2023 of $0.27. 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 $1.88. 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 2.56 based on a stock price of $4.82. This 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 10 year median Price/Book Value per Share Ratio of 12.69. The current P/B Ratio is 8.28 based on a stock price of $4.82, Book Value of $46.7M and Book Value per Share of $0.58. The current ratio is 35% below the 10 year median ratio. 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 12.05 based on Cash Flow per Share estimate for 2023 of $0.40, Cash Flow of $32M and a stock price of $4.82. The current ratio is 50% 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 3.73%. The current dividend yield is 4.15% based on a stock price of $4.82 and dividends of $0.20. The current dividend yield is 11.24% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 3.91%. The current dividend yield is 4.15% based on a stock price of $4.82 and dividends of $0.20. The current dividend yield is 6% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 10.39. The current P/S Ratio is 5.47 based on Revenue estimate for 2023 of $70.8M, Revenue per Share of $0.88 and a stock price of $4.82. The current ratio is 47% below the 10 year median ratio.
Results of stock price testing is that the stock price is probably relatively cheap, but could be in a reasonable range. The dividend yield tests say that the stock price is reasonable and below the median. This result is probably because dividends were flat for a time and then cut. It is never a good sign when dividends are flat and then cut. All the ratios seem quite high. For example, the 10 year median P/B Ratio is 12.69 and the current one is 8.28. A good P/B Ratio is 1.50 and you should probably not buy a stock with one over 3.00.
The results of stock price testing last year were that the stock price was 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. This has not really changed.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $6.50. This implies a total return of 39.00% with 34.85% from capital gains and 4.15% from dividends based on a stock price of $4.82.
When I look at analysts’ recommendations last year, I found 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 based on a stock price of $5.43. What happened was drop in the stock price to $4.82 for a Total Loss of $7.55% with a capital loss of 11.23% and dividend of $3.68.
The only recommendations on Stock Chase for 2022 is a Do Not Buy. He says that they are buying back shares, but they are not. Outstanding shares have increased very little at 0.2% per year in the past 5 years. Stock Chase gives this stock 3 stars out of 5. Ambrose O'Callaghan on Motley Fool reviews this company and says it is more dynamic than it appears. Adam Othman on Motley Fool says the company has potential. The company on Newswire announced their fourth quarter results for 2022.
Simply Wall Street on Yahoo Finance reviews this stock. They say they have mixed feelings about it. I can understand that. Simply Wall Street gives 2 risks for this company of unstable dividend track record and significant insider selling over the past 3 months. There was selling, but they just replaced their CEO and Chairman. Over the past year, the CFO has increased her shares by 4%.
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, NYSE-CIXX) ... learn more. The next stock I will write about will be Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... learn more on Wednesday, June 29, 2020 around 5 pm. Tomorrow on my other blog I will write about Smith Manoeuvre.... learn more on Tuesday, July 28, 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.
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