Is it a good company at a reasonable price? The stock is currently testing as cheap. Certainly, the lack of debt is a big plus. However, I wonder if the analyst who says that they sacrificed too much in paying a high dividend rather than using some of that money to reinvest in the company is right. However, I intend to continue to have this company in my investment portfolio as I still feel positive about its future. This is a small cap so it is highly risky.
I own this stock of Evertz Technologies Ltd (TSX-ET, OTC-EVTZF). I got the idea to investigate this stock from a G&M Article. It looked like something I might want to try out. This stock came up in a stock screen filter article that was looking for reliable dividend payers. That is companies that have reliable profits big enough to comfortably cover their dividend payments.
I noticed that this stock has not been great for me yet. My total return is 5.04% with a capital loss of 2.21% and dividends of 7.25%. I have had this stock for 12 years. I am holding on to it because I still expect it will do better in the future.
When I was updating my spreadsheet, I noticed that I have not done great with this stock. I have had this stock for 12 years and made a total return of 5.04% with 7.09% from dividends and a capital loss of 2.05%. Growth has been weak. Note that the financial year ends on April 30 each year, so I am covering the financial year ending April 30, 2023.
In the chart below, you can see Revenue is growing, but Cash Flow is not. However, Cash Flow less Working Capital (WC) is growing and some like this definition of Cash Flow better. Most growth seems better or past 5 years than past 10 years.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 12.85% | 2.45% |
| 5 | EPS Growth | 20.00% | 3.71% |
| 5 | Net Income Growth | 23.37% | 4.29% |
| 5 | Cash Flow Growth | -40.98% | -10.01% |
| 5 | Cash Flow less WC Growth | 51.68% | 8.69% |
| 5 | Dividend Growth | 1.39% | 0.28% |
| 5 | Stock Price Growth | -29.84% | -6.84% |
| 10 | Revenue Growth | 43.72% | 3.69% |
| 10 | EPS Growth | -4.55% | -0.46% |
| 10 | Net Income Growth | 1.39% | 0.14% |
| 10 | Cash Flow Growth | -40.21% | -5.01% |
| 10 | Cash Flow less WC Growth | 16.91% | 1.57% |
| 10 | Dividend Growth | 25.86% | 2.33% |
| 10 | Stock Price Growth | -19.48% | -2.14% |
The current dividend yield is good with dividend growth low. The current dividend is good (5% to 6% ranges) at 5.65%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.92%, 4.40% and 4.02%. The dividend growth is currently low with growth at 0.28% per year over the past 5 years. This is because dividends were cut in 2021 and then reinstated in 2022. The last dividend increase was in 2023 and it was for 5.6%.
The Dividend Payout Ratios (DPR) are too high and need improving. The DPR for 2023 for Earnings per Share (EPS) is 87% with 5 year coverage at 126%. The DPR for 2023 for Cash Flow per Share (CFPS) is 54% with 5 year coverage at 84%. The DPR for Free Cash Flow (FCF) for 2023 is 118% with 5 year coverage at 88%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 86.90% | 125.41% |
| CFPS | 54.08% | 84.16% |
| FCF | 118.27% | 87.81% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.00 because they currently have no long term debt. The Liquidity Ratio is good at 2.00. The Debt Ratio is good at 2.29. The Leverage and Debt/Equity Ratios are good at 1.77 and 0.77.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.00 | 0.00 |
| Intang/GW | 0.03 | 0.02 |
| Liquidity | 2.00 | 2.00 |
| Liq. + CF | 1.99 | 2.20 |
| Debt Ratio | 2.29 | 2.29 |
| Leverage | 1.77 | 1.77 |
| D/E Ratio | 0.77 | 0.77 |
The Total Return per year is shown below for years of 5 to 16 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 | 0.28% | -0.12% | -6.84% | 6.72% |
| 2012 | 10 | 2.33% | 5.75% | -2.14% | 7.89% |
| 2007 | 15 | 9.01% | -1.01% | -5.43% | 4.42% |
| 2006 | 16 | 5.43% | -0.39% | 5.82% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.17, 16.04 and 17.87. The corresponding 10 year ratios are 14.86, 17.23 and 20.26. The corresponding historical ratios are 14.31, 17.45 and 19.84. The current P/E Ratio is 14.45 based on a stock price of $13.44 and EPS estimate for 2024 of $0.93. This ratio is below the low ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $8.18. The 10-year low, median, and high median Price/Graham Price Ratios are 1.49, 1.70 and 1.93. The current P/GP Ratio is 1.64 based on a stock price of $13.44. 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 3.67. The current P/B Ratio is 4.21 based on a Book Value of $243M, Book Value per Share of $3.20 and a stock price of $13.44. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 14.69. The current P/CF Ratio is 11.11 based on Cash Flow per Share estimate for 2024 of $1.21, Cash Flow of $92M and a stock price of $13.44. The current ratio is 24% 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 4.02%. The current dividend yield is 5.65% based on dividends of $0.76 and a stock price of $13.44. The current dividend yield is 41% 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 4.40%. The current dividend yield is 5.65% based on dividends of $0.76 and a stock price of $13.44. The current dividend yield is 28% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 3.03. The current P/S Ratio is 2.06 based on Revenue estimate for 2024 of $496M, Revenue per Share of $6.51 and a stock price of $13.44. The current ratio is 32% 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 show this as does the P/S Ratio test. Most of the other testing is showing the stock price as cheap or reasonable.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $16.67. This implies a total return of 29.69% with 24.03% from capital gains and 5.65% from dividends.
The last entry on Stock Chase was in 2021. Any comments generally were negative. Stock Chase gives this stock 1 star out of 5. It is not on any dividend list, but it is a small cap. Christopher Liew on Motley Fool thinks high dividend paying small caps are good to add to your portfolio for passive income. Ambrose O'Callaghan on Motley Fool says Evertz is a cheap stock that offers a big dividend and it could skyrocket in 2023. The company put out a press release on Newsfile about their year-end of 2023 report.
Simply Wall Street put out a report via Yahoo Finance about this company. Simply Wall Street gives this stock 4 stars out of 5. It gives one warning of dividend of 5.76% is not well covered.
Evertz Technologies Ltd is a Canadian provider of telecommunications equipment and technology solutions to the television broadcast and new-media industries. More than half of the firm's revenue is generated in the United States. Its web site is here Evertz Technologies Ltd.
The last stock I wrote about was about was Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF) ... learn more. The next stock I will write about will be Superior Plus Corp (TSX-SPB, OTC-SUUIF) ... learn more on Wednesday, August 9, 2023 around 5 pm. Tomorrow on my other blog I will write about Poor Spellers Help .... learn more on Tuesday, August 8, 2023 around 5 pm.
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