Is it a good company at a reasonable price? The stock price is probably reasonable. I do not think that it is cheap. It has gone up by 46% last year and another 17% this year. It is small and rather risky, but may be fun and a good way to invest in the oil and gas industry. It has very good debt ratios which will help this company in tough times.
I do not own this stock of Pason Systems Inc (TSX-PSI, OTC-PSYTF). I read a report on this stock in the Buy and Sell Advisor in September 2013. I had not heard of this dividend growth company before so I decided to investigate it.
When I was updating my spreadsheet, I noticed EPS is much higher than expected. It was expected to come in at $0.28 at 250% higher than in 2020, but it came in at $0.41 at 413% higher. They have increased their dividends by 60% this year after two years of declining dividends.
If you had invested in this company in December 2011, for $1,008.00 you would have bought 84 shares at $12.00 per share. In December 2021, after 10 years you would have received $488.88 in dividends. The stock would be worth $20,001.59. Your total return would have been $1,458.24.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.00 | $1,008.00 | 84 | 10 | $488.88 | $969.36 | $1,458.24 |
The dividend yields are moderate with dividend growth restarted. The current dividend yield is moderate (2% to 4% ranges) at 2.38%. The 5, 10 and historical median dividend yields are also moderate at 3.58%, 3.49% and 2.44%. Dividends have had their ups and downs. The last dividend increase was for 60% and it was in 2022. However, dividends are down by 21.7% per year over the past 5 years. Of my 17 years of data, dividends were increased 12 times and decreased 3 times.
The Dividend Payout Ratios (DPR) are expected to be good in 2021 after some were rather high in 2021. The DPR for EPS for 2022 is 49% with 5 year coverage at 130%. However, the DPR for 2022 is expected to be 33% with 5 year coverage at 86%. This company also provides Funds from Operations (FFO) data. The DPR for FFO for 2021 is 24% with 5 year coverage at 59%. The DPR for Cash Flows per Share for 2021 is 23% with 5 year coverage at 54%. The DPR for Free Cash Flow (FCF) for 2021 is 75% with 5 year coverage at 77%. The DPR for FCF is expected to be 29% in 2022 with 5 year coverage at 63%.
Debt Ratios are very good and this will see a small company through the tough times. The Long Term Debt/Market Cap Ratio for 2021 is good and very low at 0.03. The Liquidity Ratio is very good and high at 5.33. The Debt Ratio is good and high at 5.27. Leverage and Debt/Equity Ratios are low and good at 1.22 and 0.23.
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 | -21.71% | -6.66% | -10.09% | 3.43% |
| 2011 | 10 | -5.44% | 4.57% | -0.39% | 4.96% |
| 2006 | 15 | 4.73% | 2.73% | -0.92% | 3.65% |
| 2001 | 20 | 8.78% | 13.88% | 8.45% | 5.43% |
| 1996 | 25 | 18.77% | 13.07% | 5.70% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 22.59, 26.82 and 33.62. The corresponding 10 year ratios are 21.30, 26.79 and 32.28. The corresponding historical ratios are 14.85, 19.90 and 25.63. The current P/E Ratio is 13.73 based on a stock price of $13.46 and EPS estimate for 2022 of $0.98. This ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
The company provides Funds from Operations (FFO) data. The 5-year low, median, and high median P/FFO are 10.45, 12.94 and 16.17. The corresponding 10 year ratios are 10.12, 12.92 and 15.56. The current P/FFO Ratio is 12.02 based on a stock price of $13.46 and last 12 months FFO of $1.12. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $9.50. The 10-year low, median, and high median Price/Graham Price Ratios are 1.94, 2.70 and 3.16. The current ratio is 1.42 based on a stock price of $13.46. 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 10-year median Price/Book Value per Share Ratio of 3.96. The current P/B Ratio is 3.29 based on a stock price of $13.46, Book Value of $336M and Book Value per Share of $4.09. The current ratio is 17% 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 13.34. The current P/CF Ratio is 9.68 based on a stock price of $13.46 and Cash Flow per Share (CFPS) estimate for 2022 of $1.39. The current ratio is 27% 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 2.44%. The current dividend yield is 2.38% based on dividends of $0.32 and a stock price of $13.46. The current dividend yield is 2.6% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 2.49%. The current dividend yield is 2.38% based on dividends of $0.32 and a stock price of $13.46. The current dividend yield is 32% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 4.94. The current P/S Ratio 3.42 based on Revenue estimate for 2022 of $323, Revenue per Share of $3.93 and a stock price of $13.46. The current ratio is 31% 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 reasonable. The P/S Ratio testing says it is relatively cheap. However, the dividend yield testing says it is reasonable to expensive. The problem with the dividend yield testing is that dividends have both gone up and down. Other testing says it is either cheap or reasonable. See comments also below. It is rather had to peg down there the current price is, but the stock price is currently going up. It connected to the oil and gas industries.
Another way of looking at my data is to see what the P/E, P/S and Beginning Yields were for total returns in the past. From this it looks like the current P/E Ratio might be ok, but the current P/S Ratio is rather high. I still cannot judge the dividend yield because dividends have changed a lot in the past.
| # Years | Total Ret | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | -6.66% | -40.92 | 10.36 | 3.46% |
| 10 | 4.57% | 11.54 | 2.95 | 2.92% |
| 15 | 2.73% | 16.37 | 4.34 | 0.75% |
| 20 | 13.88% | 10.36 | 2.52 | |
| 23 | 19.02% | 10.43 | 1.99 | |
| current | 13.73 | 3.42 | 2.38% |
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3), Hold (1) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $19.67. This implies a total return of 48.51% with 46.14% from capital gains and 2.38% from Dividends based on a stock price of $13.46.
The only entry on Stock Chase for 2022 is a Buy recommendation. Stock Chase gives this stock 4 stars out of 5. It is, of course, not on the Money Sense list as dividends are not dependable. Karen Thomas on Motley Fool thinks the stock is attractive from a valuation point of view. Vishesh Raisinghani on Motley Fool says this stock is an outperforming niche stock. The company has a press release on Newswire about their fourth quarter of 2021. The company has a press release on Newswire about their second quarter of 2022 results.
Simply Wall Street via Yahoo Finance looks at this stock. They list one risk of unstable dividend track record.
Pason Systems Inc is an oilfield specialist with fully integrated drilling data solutions. A host of products allow customers to collect, manage, report, and analyze drilling data for performance optimization and cost control. The company operates in three geographic segments: Canada, the United States, and International (Latin America, Offshore, the Eastern Hemisphere, and the Middle East). Its web site is here Pason Systems Inc .
The last stock I wrote about was about was EQB Inc (TSX-EQB, OTC-EQGPF) ... learn more. The next stock I will write about will be Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more on Wednesday, October 19, 2022 around 5 pm. Tomorrow on my other blog I will write about Tontines .... learn more on Tuesday, October 18, 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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