Is it a good company at a reasonable price? I found this an interesting company. I do like to dabble in Tech stocks. I bought some of this, but did not spend much money on it. By a lot of measures, this stock is expensive, but Tech stocks tend to have very high ratios. According to the dividend yield tests and the P/S Ratio test though, this stock is still reasonable. I intend to hold on to what I got, but have no intentions of buying any more at present.
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. The financial year is April 30 each year, so I am reviewing the financial year ending April 30, 2023. I have had this stock for 12 years and I have earnings a total return of 26.63% with 24.12% from capital gains and 2.51% from dividends.
When I was updating my spreadsheet, I noticed they did not have a good year as far as earnings go as earnings dropped 53% from 2022 financial year from $0.30 to $0.14. Analysts expect earnings will be better in the 2024 financial year at $0.27 and then the next year at $0.49. Management seems positive about the future as they still raised the dividend in 2024, but by a lower than usual percentage.
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 $517.66 in dividends. The stock would be worth $7,587.58. Your total return would have been $8,105.24. This is a total return would be 24.38% per year with a capital gain of 22.45% and dividends of 1.92%.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.50 | $1,001.00 | 286 | 10 | $517.66 | $7,587.58 | $8,105.2 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.13%. The 5, 10 and historical dividend yields are also low at 0.98%, 1.24% and 1.35%. The dividends have been increasing at a moderate rate (8% to 14% ranges) at 8.6% per year over the past 5 years. The last dividend increase was low (below 8%) at 7% and occurred in 2024 financial year.
The Dividend Payout Ratios (DPR) are generally too high. The DPR for 2023 for Earnings per Share (EPS) is 200% with 5 year coverage at 117%. This is too high. The DPR for 2023 for Cash Flow per Share (CFPS) is 47% with 5 year coverage also at 47%. This is too high also and would be better at 40% or less. The DPR for 2023 for Free Cash Flow (FCF) is fine at 55% with 5 year coverage at 43%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 200.00% | 117.14% |
| CFPS | 46.56% | 46.56% |
| FCF | 54.65% | 43.25% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is very low and good at 0.02. The Liquidity is a bit low at 1.45 and prefer it to be at 1.50 or higher. However, if you add in Cash Flow after dividends it is at 1.52. The Debt Ratio is good at 2.25. The Leverage and Debt/Equity Ratios are good at 1.80 and 0.80 respectively.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 0.02 | 0.00 |
| Intang/GW | 0.07 | 0.07 |
| Liquidity | 1.45 | 1.45 |
| Liq. + CF | 1.52 | 1.52 |
| Debt Ratio | 2.25 | 2.25 |
| Leverage | 1.80 | 1.80 |
| D/E Ratio | 0.80 | 0.80 |
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 | 8.64% | 10.81% | 9.59% | 1.21% |
| 2012 | 10 | 14.87% | 24.38% | 22.45% | 1.92% |
| 2007 | 15 | 13.85% | 22.27% | 20.34% | 1.93% |
| 2002 | 20 | 17.71% | 16.55% | 1.16% | |
| 1998 | 24 | 9.79% | 9.21% | 0.57% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 70.00, 91.98 and 129.17. The corresponding 10 year ratios are 41.95, 56.01 and 70.07. The corresponding historical ratios are 13.33, 17.61 and 22.22. The current P/E Ratio is 98.19 based on a stock price of $26.51 and EPS estimate for 2024 of $0.27. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $5.42. The 10-year low, median, and high median Price/Graham Price Ratios are 2.78, 3.73 and 4.46. The current P/GP Ratio is 4.89 based on a stock price of $26.51. This ratio is above 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 4.40. The current P/B Ratio is 5.48 based on a Book Value of $70.4M, Book Value per Share of $4.84 and a stock price of $26.51. The current ratio is 25% above the 10 year median ratio. 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 44.86. The current P/CF Ratio is 49.75 based on Cash Flow for the last 12 months of $9.9M, Cash Flow per Share of $0.53 and a stock price of $26.51. The current ratio is 27% 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 1.35%. The current dividend yield is 1.13% based on dividends of $0.30 and a stock price of $26.51. The current dividend yield 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 an historical median dividend yield of 1.24%. The current dividend yield is 1.13% based on dividends of $0.30 and a stock price of $26.51. The current dividend yield is 8.8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.44. The current P/S Ratio is 2.27 based on Revenue estimate for 2024 of $170M, Revenue per Share of $11.67 and a stock price of $26.51. The current ratio is 6.8% 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 could be reasonable. This is a tech company and they often have very high ratios, which is what this company has. The dividend testing says it is reasonable, but above the median. The P/S Ratio test says the stock is reasonable, and below the median. The rest of the testings, even with testing against very high ratios, are say the stock price is expensive.
When I look at analysts’ recommendations, I find Buy (4) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $46.75. This implies a total return of 77.48% with 76.35% from capital gains and $1.13% from dividends.
There is one analyst recommendation on Stock Chase for this stock and it is positive. Stock Chase gives this stock 3 stars out of 5. Christopher Liew on Motley Fool says to buy because it will be an AI winner. Ambrose O'Callaghan on Motley Fool thinks this stock is trading in a favourable value territory. The company put out a press release on Newswire about their fourth quarter results for 2023.
Simply Wall Street on Yahoo Finance reviews this stock and its dividend payments. Simply Wall Street has two warnings for this stock of profit margins (1.4%) are lower than last year (3.3%); and significant insider selling over the past 3 months. The CEO did sell 3% of his holdings over the past year, but the CFO and Chairman bought shares. You never know why people sell shares, but if they buy them, it is because they feel positive about a company.
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 most of the revenue from the United States and 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 Monday, July 24, 2023 around 5 pm.
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