Is it a good company at a reasonable price? This is a high risk investment because it is a small company and it is Tech and it has been having some problems of late. Long Term returns have varied a lot. Betting on it might work out ok. The stock price would seem to be cheap.
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 that the Liquidity Ratio was really low. For 2022 it is 0.56. I like this ratio to be 1.50 or higher. They have Deferred Revenue but this only get them to 0.94. They also have Credit Facilities. With both Deferred Revenue and Credit facilities the Ratio is 3.92. The problem with low Liquidity Ratios, a company can be forced into a bad situation in economic recession. In an economic recession, a company may not be able to count on Credit Facilities.
If you had invested in this company in December 2012, for $1,001.00 you would have bought 286 shares at $3.50 per share. In December 2022, after 10 years you would have received $943.80 in dividends. The stock would be worth $1,761.76. Your total return would have been $2,705.56.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.50 | $1,001.00 | 286 | 10 | $943.80 | $1,761.76 | $2,705.56 |
If you had invested in this company in December 1998 just after when it started to trade on the TSX, for $1,000.35 you would have bought 117 shares at $8.55 per share. In December 2022, after 24 years you would have received $416.40 in dividends. The stock would be worth $720.72. Your total return would have been $1,137.12.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $8.55 | $1,000.35 | 117 | 24 | $416.40 | $720.72 | $1,137.12 |
The dividend yields are good with dividend growth moderate. The current dividend yield is good (5% to 6% ranges) at 6.61%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 3.64%, 3.02% and 3.02%. The dividend growth over the past 5 years to the end of September 2022 financial year is moderate (8% to 14% ranges) at 12.3% per year. Unfortunately, the last change to dividends is a decrease of 20%. Therefore, if we take the growth to date it is low at 4.6% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are awful and they cannot afford their dividends. The DPR for EPS for 2022 is 417% with 5 year coverage at 153%. The DPR for EPS is not expected to be under 100% within the next 3 years. The DPR for Adjusted Earnings Per Share (AEPS) for 2022 is 294% with 5 year coverage at 150%. This is also not expected to be under 100% in the next 3 years. The DPR for Cash Flow per Share (CFPS) for 2022 is 92% with 5 year coverage at 72%. This is expected to be over 100% soon and it should be at 40% or lower. The DPR for Free Cash Flow (FCF) for 2022 (by WSJ) is 101% with 5 year coverage at 76%. There is no agreement on what the FCF is.
The problem for Debt Ratios is the awful Liquidity Ratio with other ratios fine. The Long Term Debt/Market Cap Ratio is good and low at 0.17. The Liquidity Ratio is awful at 0.56 and adding in Cash Flow after dividends just moves it to 0.58. You only get a good one by considering the current debt and it reaches a good 3.26. However, low Liquidity Ratios can cause problems in bad times and in bad times you cannot always roll over your debt. The Debt Ratio is good at 1.56. The Leverage and Debt/Equity Ratios are fine at 2.80 and 1.80.
The Total Return per year is shown below for years of 5 to 24 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 12.30% | -4.06% | -9.38% | 5.32% |
| 2012 | 10 | 15.34% | 13.23% | 5.82% | 7.41% |
| 2007 | 15 | 18.69% | 32.28% | 20.00% | 12.29% |
| 2002 | 20 | 37.09% | 26.06% | 11.03% | |
| 1998 | 24 | 0.75% | -1.36% | 2.10% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 45.25, 76.39 and 98.61. The corresponding 10 year ratios are 34.24, 47.38 and 61.77. The corresponding historical ratios are 14.63, 21.05 and 26.05. The current P/E Ratio is 43.21 based on a stock price of $6.05 and EPS estimate for 2023 of $0.14. The current 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. Note that the ratios are very high. When EPS falls, the stock price will only fall so much because people see that the company has value.
I also have Adjusted Earnings per Share Ratios. The 5-year low, median, and high median Price/Earnings per Share Ratios are 24.55, 28.98 and 33.41. The corresponding 10 year ratios are 24.24, 30.17 and 37.33. The current P/AEPS Ratio is 31.84 based on AEPS for 2023 of $0.19 and a stock price of $6.05. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. These are also very high ratios.
I get a Graham Price of $2.33. The 10-year low, median, and high median Price/Graham Price Ratios are 2.22, 2.92 and 3.89. The current ratio is 2.60 based on a stock price of $6.05. 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 10-year median Price/Book Value per Share Ratio of 5.15. The current P/B Ratio is 3.51 based on a stock price of $6.05, Book Value per Share of $1.73 and a Book Value of $41M. The current ratio is 32% 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 18.21. The current P/CF Ratio is 22.26 based on Cash Flow per Share estimate for 2023 of $0.27, Cash Flow of $6.5M and a stock price of $6.05. The current ratio is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.02%. The current dividend yield is 6.61% based on dividends of $0.40 and a stock price of $6.05. The current dividend yield is 119% above the historical median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.02%. The current dividend yield is 6.61% based on dividends of $0.40 and a stock price of $6.05. The current dividend yield is 119% above the 10 year median ratio. 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 2.40 based on a stock price of $6.05, Revenue estimate for 2023 of $60.2M and Revenue per Share of $2.52. The current ratio is 66% 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 probably cheap. The dividend yield tests say so and is confirmed by the P/S Ratio tests. However, there are lots of problems in testing this stock. Lots of ratios are very high, including P/E Ratios, P/B Ratios, P/CF Ratios and P/GP Ratios. The dividend yield is still quite high considering the recent cut to dividends. The clearest test is the P/S Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $9.38. This implies a total return of 61.65% with 55.04% from capital gains and 6.61% from dividend based on a stock price of $6.05.
Opinions on this stock on Stock Chase vary a lot from Buy to Do Not Buy. Problem is the stock is illiquid. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense list. Christopher Liew on Motley Fool thinks there is a fire sale on this stock with solid organic growth. Robin Brown on Motley Fool thinks this stock is incredibly cheap. The company put out a Press Release on their 2022 results.
Simply Wall Street via Yahoo Finance says this stock is undervalue and its intrinsic value is $10.81. Simply Wall Street has 3 risk warnings of earnings are forecast to decline by an average of 155.6% per year for the next 3 years; large one-off items impacting financial results; and profit margins (5.4%) are lower than last year (11.3%).
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. Most 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 27 around 5 pm. Tomorrow on my other blog I will write about Financial Psychology .... learn more on Thursday, January 25, 2023 around 5 pm.
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