Is it a good company at a reasonable price? I still like this company. I do not sell stock just because they are expensive. However, I will not buy any more of the shares of this company at this time. It is a small cap and therefore risky. It is a Tech company and it is probably going to always be expensive to buy.
I own this stock of TECSYS Inc (TSX-TCS, OTC-TCYSF). I came across this stock when I was looking for a dividend paying small cap stock as a filler stock. This is a small cap dividend paying stock that I like. You never know how small caps will turn out. I took a chance on another small cap in 2000 and ended up owning some 6 shares in an African copper main worth just over $1.00. However, on this stock I have done well earning 30% per year over the past 11 years.
When I was updating my spreadsheet, I noticed earnings were expected to go down 8% to $0.45, but they went down 38% to $.30. Revenue went down because the ratio of the Cost of Revenue to Revenue went up. Note that this company has an April 30 ending for the financial year. So, I am looking at financials ending April 30, 2022.
If you had invested in this company in December 2011, $1001.27 you would have bought 449 shares at $2.23 per share. In December 2021, after 10 years you would have received $718.40 in dividends. The stock would be worth $23,621.89. Your total return would have been $24,340.29. Unfortunately, the stock price has decline and recently, this stock would be worth only $13,829.20. But that is still a good increase and we are probably in a bear market.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $2.23 | $1,001.27 | 449 | 10 | $718.40 | $23,621.89 | $24,340.29 |
The dividend yields are low with dividend growth good. The current dividend yield is quite low (below 2%) at 0.91%. The 5, 10 and Historical median dividend yields are also low at 1.24%, 1.26% and 1.42%. The dividends have increased at a good rate (15% or higher) at 15.7% per year over the past 5 years. However, the last dividend increase, which was in 2022 was lower at 7.7%.
The Dividend Payout Ratios (DPR) are high, but are expected to improve. The DPR for EPS for 2022 is 90% with 5 year coverage at 79%. The DPR for EPS is expected to raise over 100% in 2023 before fall to around 50% in 2024. The DPR for Cash Flow per Share for 2022 is 17% with 5 year coverage at 33%. The DPR for Free Cash Flow (FCF) for 2022 is 104% with 5 year coverage at 44%. The DPR for FCF is expected to fall to 46% in 2023.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is low and good at just 0.02. The Liquidity Ratio for 2022 is good at 1.71. The Debt Ratio for 2022 is good at 2.20. The Leverage and Debt/Equity Ratios are also good at 1.83 and 0.83.
The Total Return per year is shown below for years of 5 to 23 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 | 15.74% | 42.22% | 40.94% | 1.45% |
| 2011 | 10 | 16.23% | 38.89% | 37.18% | 2.08% |
| 2006 | 15 | 14.61% | 29.51% | 27.98% | 1.77% |
| 2001 | 20 | 17.96% | 17.45% | 0.90% | |
| 1998 | 23 | 13.27% | 12.94% | 0.46% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 45.94, 80.45 and 85.87. The corresponding 10 year ratios are 32.25, 42.86 and 53.46. The corresponding historical ratios are 13.17, 16.41 and 19.65. You can see from this that the stock prices have move higher a lot quicker than EPS. The current P/E Ratio is 147.75 based on a stock price of $34.46 and EPS for 2023 of $0.24. The current P/E Ratio is very high and higher than the high ratio of 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
The P/E Ratio is dropping to 64.47 next year based on a stock price of $35.46 and EPS estimate for 2024 of $0.55. This is still a high ratio, but not uncommon for Tech stocks. Although you must be careful buying stock at this high a ratio. It should not be a long term buy.
I get a Graham Price of $5.05. The 10 year low, median, and high median Price/Graham Price Ratios are 2.48, 3.30 and 4.12. These are also very high ratios. The current P/GP Ratio is 7.03 based on a stock price of $34.56. The current P/GP Ratio is higher than the high ratio of the 10 year median ratios. 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 4.25. The current P/B Ratio is 7.52 based on a Book Value of $68.68M, Book Value per Share of $4.72 and a stock price of $34.56. The current ratio is above the 10 year median ratio by 77%. 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 26.63. The current P/CF Ratio is 27.02 based on Cash Flow for last 12 months of $19M, Cash Flow per Share of $1.31 and a stock price of $34.56. The current P/CF Ratio is 1.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, these ratios are rather high ones.
I get an historical median dividend yield of 1.42%. The current dividend yield is 0.79% based on dividends of $2.80 and a stock price of $34.56. The current dividend yield is 44% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.26%. The current dividend yield is 0.79% based on dividends of $2.80 and a stock price of $34.56. The current dividend yield is 37% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 2.07. The current P/S Ratio is 3.49 based on Revenue estimate for 2023 of $148M, Revenue per Share of $10.16 and a stock price of $34.56. The current P/S Ratio is 68% above the 10 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 expensive. The dividend yield tests show this and this is confirmed by the P/S Ratio test. All the tests, except for the P/CF Ratio test, shows the stock price as expensive. This is interesting.
Last year I said that the results of stock price testing were that the stock price was probably expensive. The dividend yield tests show this and it is confirmed by the P/S Ratio test. However, all the testing points to that fact that the stock price is relatively expensive.
Is it a good company at a reasonable price? Last year’s answer was that I still like this company and would not sell just because it is expensive. I also do not think now is the time to start to lock in my profit on this stock. However, now is probably not the time to buy this company. Also, I generally do not buy dividend stock when the yield is below 1%. (I have not changed my mind on this.)
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (6). The consensus would be a Buy. The 12 month stock price consensus is $47.50. This implies a total return of $34.74% with 33.95% from capital gains and 0.79% from dividends based on a stock price of $34.56.
When I look at analysts’ recommendations last year, I found Strong Buy (1), Buy (4). The consensus would be a Buy. The 12 month stock price consensus is $61.00. This implies a total return of $24.69% with 0.53% from dividends and 24.16% from capital gains based on a stock price of $49.13. What happened was a stock price decline to $34.46 and a Total Loss of $27.29% with a capital loss of 27.82 and dividends of $0.53%. However, the stock did reach a high of $63.21 in February 2021. It has a YTD decline of 33%. It is a Tech stock and lots of Tech stocks are down this year.
An entry for March 2022 on Stock Chase says it is cheap. Stock Chase gives this stock 4 stars out of 5. It is not on Money Sense’s list because it is a small cap. Christopher Liew on Motley Fool says it is a quality stock with pricing powers. Adam Othman on Motley Fool says if this tech company can continue its growth, it will turn $1,000 into $10,000 in 10 years’ time. The company put out a Press Release on their fourth quarter results for April 2022. Simply Wall Street reporting via Yahoo Finance says they like the way this company handles debt. They show one risk of profit margins (3.3%) are lower than last year (5.8%).
TECSYS Inc is engaged in the development and sale of enterprise supply chain management software for distribution, warehousing, transportation logistics, point-of-use, and order management. It also provides related consulting, education, and support services. Geographically, it derives a majority of revenue from the United States and also has a presence in Canada and Other Countries. Its web site is here TECSYS Inc.
The last stock I wrote about was about was Pulse Seismic Inc (TSX-PSD, OTC-PLSDF) ... learn more. The next stock I will write about will be Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more on Wednesday, July 27, 2022 around 5 pm. Tomorrow on my other blog I will write about Investing for the Long Term. .... learn more on Tuesday, July 26, 2022 around 5 pm.
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