Is it a good company at a reasonable price? I generally like companies to have a total return of 8% between capital gains and dividends. The dividends have been good on this stock, but there has not been much in capital gains. It is not well followed. It seems to be catering to small business. On the plus side they have been paying dividends to shareholders for the last 35 years. Results of stock price testing is that the stock price is probably cheap. It is also somewhat risky.
I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). Fred Poulin from StockTwits recommended this stock saying it was a small cap that pay dividends.
When I was updating my spreadsheet, I noticed earnings and adjusted earnings were way down in 2022. This is due to Provisions for Credit and Loan losses of some $8.3M and Impairment of Assets of $1.9M. EPS dropped from 1.39 in 2021 to $0.17 in 2022. AEPS dropped from $1.53 and $0.24.
If you look at growth for this company over the past 5 and 10 years, they have growth in Revenue but not earnings.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 114.88% | 16.53% |
| 5 | AEPS Growth | -71.43% | -22.16% |
| 5 | Net Income Growth | -77.03% | -25.49% |
| 5 | Cash Flow Growth | 141.86% | 19.32% |
| 5 | Cash Flow Gth w/o WC | 65.15% | 10.55% |
| 5 | Dividend Growth | -16.67% | -3.58% |
| 5 | Stock Price Growth | -16.30% | -3.50% |
| 10 | Revenue Growth | 160.68% | 10.06% |
| 10 | AEPS Growth | -68.83% | -11.00% |
| 10 | Net Income Growth | -77.62% | -13.90% |
| 10 | Cash Flow Growth | 121.08% | 8.26% |
| 10 | Cash Flow Gth w/o WC | -61.34% | -9.07% |
| 10 | Dividend Growth | -3.23% | -0.33% |
| 10 | Stock Price Growth | 10.00% | 0.96% |
If you had invested in this company in December 2012, for $1,001.00 you would have bought 143 shares at $7.00 per share. In December 2022, after 10 years you would have received $454.74 in dividends. The stock would be worth $1,101.10. Your total return would have been $1,555.84. This is a total return would be 5.38% per year with 0.96% from capital gains and 4.42% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.00 | $1,001.00 | 143 | 10 | $454.74 | $1,101.10 | $1,555.84 |
The current dividend yield is good with dividend growth flat after a decline. The current dividend yield is good (5% to 6% ranges) at 5.01%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 3.61%, 3.72% and 2.63%. Dividends were increasing until 2016 and then they were flat to 202 when they were cut 44%. In 2022 the dividends were increased by 50%. They are still 17% below the 2019 dividends. Analysts expect the dividends to remain flat for the next while.
The Dividend Payout Ratios (DPR) are fine going into the future. The DPR for Earnings per Share (EPS) for 2022 is 177% with 5 year coverage at 40%. Analysts expect the DPR for EPS to be 54% this year. The DPR for Adjusted Earnings per Share (AEPS) is 125% with 5 year coverage at 66%. The DPR for Cash Flow per Share (CFPS) for 2022 is 18% with 5 year coverage at 23%. The DPR for Free Cash Flow (FCF) for 2022 is 7% with 5 year coverage at 13%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 176.47% | 40.44% |
| AEPS | 125.00% | 65.57% |
| CFPS | 17.51% | 22.84% |
| FCF | 6.56% | 12.79% |
Debt Ratios are fine. The Long Term Debt/Market Cap for 2022 is high at 5.18 and rising to 7.35 currently. However, for financials, we often look at Long Term Debt/Coverage Assets Ratio for 2022 for this stock is fine at 0.74 for 2022. The Liquidity Ratio for 2022 for is high and very good for this company, but it is not an important ratio for financials. The Debt Ratio is fine for Financials for 2022 at 1.28. The Leverage and Debt/Equity Ratios for 2022 at 4.87 and 3.81 and the currently ones at 5.16 and 4.11 are fine for financials.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 5.18 | 7.35 |
| Lg Term A | 0.74 | 0.78 |
| Intang/GW | 0.23 | 0.29 |
| Liquidity | 14.26 | 16.56 |
| Liq. + CF | 15.15 | 15.23 |
| Debt Ratio | 1.28 | 1.26 |
| Leverage | 4.87 | 5.16 |
| D/E Ratio | 3.81 | 4.11 |
The Total Return per year is shown below for years of 5 to 30 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 | -3.58% | -0.09% | -3.50% | 3.40% |
| 2012 | 10 | -0.33% | 5.38% | 0.96% | 4.42% |
| 2007 | 15 | 2.09% | 3.60% | -0.25% | 3.85% |
| 2002 | 20 | 2.05% | 8.75% | 2.13% | 6.62% |
| 1997 | 25 | 1.64% | 8.10% | 2.50% | 5.59% |
| 1992 | 30 | 6.95% | 11.59% | 4.96% | 6.62% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.05, 12.34 and 13.62. The corresponding 10 year ratios are 10.24, 11.44 and 12.65. The corresponding historical ratios are 8.57, 10.59 and 11.94. The current P/E Ratio is 10.23 based on a stock price of $5.73 and EPS estimate for 2023 of $0.56. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. Note that the EPS is expected to be much higher in 2024 at $1.18 and that gives a P/E Ratio of 4.86.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 14.48, 16.16 and 17.84. The corresponding 10 year ratios are 8.85, 9.86 and 11.06. The current ratio is 71.63 based on the AEPS for the last 12 months of $0.08 and a stock price of $5.73. The 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 went back to check my figures and the 12 months AEPS is $0.08. It did seem too low. The company has an AEPS for 2023 of $0.24 and the 6 month AEPS to June 2022 is $0.39 and the 6 month AEPS to June 2023 is $0.23. This gives a 12 month AEPS for $0.08. That is $0.24 less $0.39 and plus $0.23 is $0.08.
I get a Graham Price of $12.19. The 10-year low, median, and high median Price/Graham Price Ratios are 0.65, 0.73 and 0.81. The current P/GP Ratio is 0.47 based on a stock price $5.73. The current ratio is below the low ratio of the 10 year median ratio. 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 0.99. The current P/B Ratio is 0.49 based on a Book Value of $100.9M, Book Value per Share of $11.79 and a stock price of $5.73. The current ratio is 51% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share for 2023 of $12.10. The Book Value would be $103.6M and the ratio would be 0.47 based on a stock price of $5.73. This ratio is 52% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do a stock check on the Price/Cash Flow Ratio but I can do one for the Price Cash Flow without Working Capital. The current Cash Flow is negative, but without the WC it is positive. That 10 P/CF Ratio is 6.26. The current ratio is 3.91 based on Cash Flow without WC for the last 12 months of $12.54, Cash Flow per Share of $1.46 and a stock price of $5.73. The current ratio is 37% 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 2.63%. The current dividend yield is 5.24% based on a dividend of $0.30 and a stock price of $5.73. The current yield is 99% 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 3.72%. The current dividend yield is 5.24% based on a dividend of $0.30 and a stock price of $5.73. The current yield is 41% 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 2.22. The current P/S Ratio is 0.65 based on Revenue estimate for 2023 of $76M, Revenue per Share of $8.88 and a stock price of $5.73. The current ratio is 71% 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 this and it is confirmed by the P/S Ratio test. Most of the other tests say that the stock price is cheap.
When I look at analysts’ recommendations, I find one Strong Buy (1). The consensus would be a buy. The 12 month stock price is $11.80. This implies a total return of 111.17% with 105.93% from capital gains and 5.24% from dividends. There seems to be only one analyst following this stock and I looked at several sites.
The last entry is dated in 2014 on Stock Chase. Stock Chase gives this stock 1 star out of 5. It is noted that this company is a niche leader to small business. There seems to be nothing on Motley Fool. The company put out a Press Release on their fourth quarter results for 2022. The company put out a Press Release on their second quarter of 2023 results.
Simply Wall Street via Yahoo Finance talk about the company’s dividend. They do not seem to realize that the reason for the present decline in earnings was due to Provisions for Credit. Simply Wall Street gives 3 warnings for this stock of debt is not well covered by operating cash flow; dividend of 5.01% is not well covered by earnings or cash flows; and does not have a meaningful market cap (CA$51M).
Accord Financial Corp is a provider of asset-based financial services to businesses. Its asset-based financial services include asset-based lending, including factoring, lease financing, working capital financing, credit protection and receivables management, and supply chain financing for importers. The company's geographical segments include Canada and the United States. Its web site is here Accord Financial Corp.
The last stock I wrote about was about was Cargojet Inc (TSX-CJT, OTC-CGJTF) ... learn more. The next stock I will write about will be Telus Corp (TSX-T, NYSE-TU) ... learn more on Wednesday, September 13, 2023 around 5 pm. Tomorrow on my other blog I will write about Financial Apps.... learn more on Tuesday, September 12, 2023 around 5 pm.
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