Is it a good company at a reasonable price? This is a small industrial company that seems beaten up. It would be a risky buy. They are still increasing their dividends, so the company has confidence in the future. The price is currently cheap.
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 analysts expected sales to go up almost 20% to $552M, but they only went up 6% to $490M. Analysts also expected the EPS to go up 29% to 1.26, but instead EPS went down 50% to $0.49. Their costs went up more than the revenue. Cost to Revenue Ratio for 2021 was 0.89 and for 2022 was 0.95. Their interest expense went up the most.
There was insider buying over the past year. The Net Insider Buying Ratio is 5.81% where generally this ratio is between 0.01% to -0.01%. For example, the CEO increased his shareholding by 67% and one director increased his share holdings by 25%.
If you had invested in this company in December 2012, for $1,005.71 you would have bought 163 shares at $6.17 per share. In December 2022, after 10 years you would have received $497.56 in dividends. The stock would be worth $1,255.10. Your total return would have been $1,752.66.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $6.17 | $1,005.71 | 163 | 10 | $497.56 | $1,255.10 | $1,752.66 |
The dividend yields are good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 5.53%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.38%, 3.37% and 2.89%. The dividend growth is low (below 8% per year) at 6% per year over the past 5 years. The last dividend increase was in 2022 and it was for 5%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 85% with 5 year coverage at 49%. The DPR for Cash Flow per Share (CFPS) for 2022 is 32% with 5 year coverage at 27%. The DPR for Free Cash Flow (FCF) for 2022 is 219% with 5 year coverage at 50%. (Note: I am using FCF provided by the company.)
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is low and good at 0.32. The Liquidity Ratio for 2022 is high and good at 2.27. The Debt Ratio for 2022 is high and good at 2.53. The Leverage and Debt/Equity Ratios for 2022 are low and good at 1.65 and 0.65.
The Total Return per year is shown below for years of 5 to 32 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 | 6.01% | -1.23% | -5.36% | 4.13% |
| 2012 | 10 | 11.88% | 6.54% | 2.24% | 4.30% |
| 2007 | 15 | 13.76% | 8.33% | 4.57% | 3.76% |
| 2002 | 20 | 11.78% | 2.96% | 0.62% | 2.33% |
| 1997 | 25 | 3.55% | 1.61% | 1.94% | |
| 1992 | 30 | 7.57% | 5.51% | 2.06% | |
| 1990 | 32 | 11.80% | 9.28% | 2.52% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.73, 9.75 and 12.67. The corresponding 10 year ratios are 9.06, 11.60 and 14.17. The corresponding historical ratios are 8.73, 13.17 and 15.68. These are consistent so it makes it a more valid test. The current P/E Ratio is 10.41 based on a stock price of $7.60 and EPS estimate for 2023 of $0.73. 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.
I get a Graham Price of $11.76. The 10-year low, median, and high median Price/Graham Price Ratios are 0.66, 0.80 and 0.97. The current ratio is 0.65 based on a stock price of $7.60. The current ratio is below the low ratio 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 1.28. The current P/B Ratio is 0.90 based on a stock price of $7.60, Book Value of $328M and Book Value per Share of $8.42. The current ratio is 30% 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 8.87. The current ratio is 8.12 based on Cash Flow estimate for 2023 of $36.4M, Cash Flow per Share of $0.94 and a stock price of $7.60. This ratio is 8% 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 2.89%. The current dividend yield is 5.53% based on a dividend of $0.42 and a stock price of $7.60. The current ratio is 91% 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 3.37%. The current dividend yield is 5.53% based on a dividend of $0.42 and a stock price of $7.60. The current ratio is 64% 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 0.77. The current P/S ratio is 0.51, based on a stock price of $7.60, Revenue estimate for 2023 of $580M and Revenue per share of $14.91. The current ratio is 33% 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 cheap. The dividend yield tests say that the stock price is cheap and it is confirmed by the P/S Ratio test. Most of the other tests say it is cheap or reasonable and below the median.
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 $10.63. This implies a total return of 45.39% with 39.87% from capital gains and 5.53% from dividends based on a current stock price of $7.60.
The company seems to be liked on Stock Chase by analysts. It is not well followed and the last entry is a Buy. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense List. Christopher Liew on Motley Fool thinks this company has a bright future. Amy Legate-Wolfe on Motley Fool thinks this is a good dividend stock, cheap. The company put out a press release via Glove Newswire about their 2022 results. Simply Wall Street via Yahoo Finance talks about who owns 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. The company reports in two business segments namely, the Casting and Extrusion segment and Automotive Solutions segment. It generates maximum revenue from the Automotive Solutions segment. Geographically, it derives a majority of its 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 3, 2023 around 5 pm. Tomorrow on my other blog I will write about Future Crunch.... learn more on Thursday, February 2, 2023 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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