Is it a good company at a reasonable price? I plan to hold on to the shares I have because I have not lost faith in the future of this company. However, you should not invest in this company money you cannot afford to lose as it is on the risky side. The stock price seems reasonable. A plus for this company is that it has a new CEO who has bought shares in the company.
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 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 this company peaked in 2015. The year ending in March 2023 was a better year than they have had for some time. Revenue is up 11.6%, Earnings are up 20%, but Cash Flow is down some 9.9%, but with Cash Flow excluding Working Capital up 6.4%
I bought this company for its growth potential, but it has not grown much lately. However, I have still made money on this stock. I bought it in 2008 and 2009 and by Total Return is 20.56% per year with 11.09% from capital gains and 9.47% from dividends. The Funds Flow from Operations (FFO) is up 6.7% this year.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | -1.12% | -0.22% |
| 5 | FFO Growth | 0.00% | 0.00% |
| 5 | Net Income Growth | -4.85% | -0.99% |
| 5 | Cash Flow Growth | -15.23% | -3.25% |
| 5 | Dividend Growth | -50.00% | -12.94% |
| 5 | Stock Price Growth | -39.27% | -9.49% |
| 10 | Revenue Growth | 7.62% | 0.74% |
| 9 | FFO Growth | -23.81% | -2.68% |
| 10 | Net Income Growth | -20.24% | -2.24% |
| 10 | Cash Flow Growth | -7.82% | -0.81% |
| 10 | Dividend Growth | -37.50% | -4.59% |
| 10 | Stock Price Growth | -45.31% | -5.86% |
If you had invested in this company in December 2012, for $1,002.04 you would have bought 94 shares at $10.56 per share. In December 2022, after 10 years you would have received $318.66 in dividends. The stock would be worth $548.02. Your total return would have been $866.68.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.66 | $1,002.04 | 94 | 10 | $318.66 | $548.02 | $866.68 |
The current dividend yield is moderate with dividend growth has stopped. The current dividend yield is moderate (2% to 4% ranges) at 3.08%. The 5, 10 and historical median dividend yields are also moderate at 4.02%, 3.91%, and 3.66%. The dividends were flat from 2015 and then cut in 2021 and have again been flat. The cut in 2021 was a 50% cut.
Some Dividend Payout Ratios (DPR) are too high. The DPR for Earnings per Share (EPS) for 2022 is 83% with 5 year coverage at 111%. These DPRs are too high and would be better between 60% and 70%. The DPR for 2022 for Funds from Operations (FFO) is 63% with 5 year coverage at 85%. The DPR for 2022 for Free Cash Flow (FCF) provided by the company is 74% with 5 year coverage at 93%. The DPR for 2022 for Cash Flow per Share (CFPS) is 64% with 5 year coverage at 76%. This is too high and is better if under 40%. The DPR for Free Cash Flow (FCF) by analysts is 64% with 5 year coverage at 101%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 83.33% | 111.11% |
| FFO | 62.50% | 85.18% |
| FCF C. | 74.07% | 93.01% |
| CFPS | 63.60% | 76.35% |
| FCF | 63.78% | 100.86% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is very low and very good at 0.01. The Liquidity Ratio is good at 1.98. The Debt Ratio is good at 1.62. Leverage and Debt/Equity Ratios are fine at 2.61 and 1.61.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 0.01 | 0.01 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 1.98 | 1.98 |
| Liq. + CF | 2.18 | 2.33 |
| Debt Ratio | 1.62 | 1.62 |
| Leverage | 2.61 | 2.61 |
| D/E Ratio | 1.61 | 1.61 |
The Total Return per year is shown below for years of 5 to 26 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 | -12.94% | -6.02% | -9.49% | 3.48% |
| 2012 | 10 | -4.59% | -1.75% | -5.86% | 4.10% |
| 2007 | 15 | 6.19% | 20.12% | 8.29% | 11.83% |
| 2002 | 20 | 13.65% | 38.85% | 17.94% | 20.91% |
| 1997 | 25 | 26.02% | 15.61% | 10.40% | |
| 1996 | 26 | 17.91% | 11.13% | 6.78% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.30, 24.73 and 30.50. The corresponding 10 year ratios are 19.71, 27.43 and 33.39. The corresponding historical ratios are 12.60, 19.18 and 24.24. The current P/E Ratio is 22.41 based on a stock price of $6.50 and EPS estimate for 2024 of $0.29. 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 also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 12.87, 16.83 and 23.69. The corresponding 10 year ratios are 15.39, 23.41 and 28.28. The current P/FFO Ratio is 20.31 based on a stock price of $6.50 and FFO for the last 12 months of $0.32. 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.
I also have Free Cash Flow (FCF) data from the company. The 5-year low, median, and high median Price/ Free Cash Flow Ratios are 14.30, 18.44 and 26.36. The corresponding 10 year ratios are 16.91, 22.92 and 28.92. The current P/FFO Ratio is 24.07 based on a stock price of $6.50 and FCF for the last 12 months of $0.27. 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.
I get a Graham Price of $2.06. The 10-year low, median, and high median Price/Graham Price Ratios are 2.64, 3.90 and 4.70. The current P/GP Ratio is 3.16 based on a stock price of $6.50. 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 10-year median Price/Book Value per Share Ratio of 12.61. The current P/B Ratio is 9.99 based on a stock price of $6.50, Book Value of $52.5M and Book Value per Share of $0.65. The current ratio is 21% 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 23.33. The current P/CF Ratio is 16.25 based on Cash Flow per Share estimate for 2024 of $0.40, Cash Flow of $32.3M and a stock price of $6.50. 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 an historical median dividend yield of 3.66%. The current dividend yield is $3.08% based on a stock price of $6.50 and dividends of $0.20. The current ratio is 16% 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 3.91%. The current dividend yield is $3.08% based on a stock price of $6.50 and dividends of $0.20. The current ratio is 21% 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 8.88. The current P/S Ratio is 6.65 based on Revenue estimate for 2024 of $78.8M, Revenue per Share of $0.98 and a stock price of $6.50. The current ratio is 25% 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 could be reasonable. The P/S Ratio testing says the stock price is cheap. The dividend yield tests say it is above the median or for the 10 year dividend yield test, expensive. However, dividends have been flat for the last 3 years after a decrease. The rest of the testing mostly says that the stock price is reasonable and above or below the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (0), Hold (1) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $7.63. This implies a total return of 20.46% with 17.38% from capital gains and 3.08% from dividends.
The only recommendation this year on Stock Chase is a Buy because analyst sees the stock as looking powerful. Last year the only recommendation was a Do Not Buy because of high valuation. Stock Chase gives this stock 4 stars out of 5. Christopher Liew on Motley Fool says you will be glad you bought once the bull market is underway. Adam Othman on Motley Fool says this company has an early-bird advantage with AI. The company put out a press release on Accesswire about the fourth quarter of 2022 results.
Simply Wall Street via Yahoo Finance reviews this stock. They think the stock has some positive values but worry about the declining earnings. Simply Wall Street gives this stock 3 and one half stars out of 5. They have 2 warnings of unstable dividend track record; and significant insider selling over the past 3 months. Over the past year, 1 director was selling, but the new CEO bought shares and the CFO increased their shares.
Computer Modelling Group Ltd is a Canada-based provider of reservoir simulation software for the oil and gas industry. The firm has operations in 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 Monday, June 26, 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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