Is it a good company at a reasonable price? The problem with this stock is that it could be cheap for a reason. Earnings growth stopped after 2018. It has restarted over the past 2 years, but the EPS is not back to where it was. The company is expected to have earnings growth this year. It is a small cap, so you are taking a risk when investing. They did act properly in stopping dividend growth. And, the stock is testing as 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 that their last dividend increase was in 2022. The Dividend Payout Ratio (DPR) went to 85% in 2022. It has been coming down since then. Ideally, the DPR should be in the 40% ranges and it is expected to be a round 41% in 2025. It is never a good sign when a company stops raising their dividends.
In this chart covering for the last 5 and 10 years, you can see that they are having a hard time earnings money. They have cash flow, but earnings are lacking. This would be why they stopped dividend growth. Analysts see to expect some earnings growth this year. In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2025 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 25.71% | 4.68% | -0.52% | <-12 mths |
| 5 | AEPS Growth | -5.00% | -1.02% | 3.95% | <-12 mths |
| 5 | Net Income Growth | 11.21% | 2.15% | 6.51% | <-12 mths |
| 5 | Cash Flow Growth | 26.12% | 4.75% | ||
| 5 | Dividend Growth | 18.31% | 3.42% | 0.00% | <-12 mths |
| 5 | Stock Price Growth | 8.71% | 1.68% | -9.26% | <-12 mths |
| 10 | Revenue Growth | 73.19% | 5.65% | 4.20% | <-this year |
| 10 | AEPS Growth | -8.43% | -0.88% | 36.84% | <-this year |
| 10 | Net Income Growth | -3.39% | -0.34% | 36.05% | <-this year |
| 10 | Cash Flow Growth | 102.47% | 7.31% | ||
| 10 | Dividend Growth | 115.38% | 7.97% | 0.00% | <-this year |
| 10 | Stock Price Growth | -21.28% | -2.36% | 62.70% | <-this year |
If you had invested in this company in December 2014, for $1,002.15 you would have bought 84 shares at $11.79 per share. In December 2024, after 10 years you would have received $299.63 in dividends. The stock would be worth $638.35. Your total return would have been $937.98. This would be a total loss of 0.75% per year with 4.41% from capital loss and 3.66% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $11.79 | $1,002.15 | 85 | 10 | $299.63 | $638.35 | $937.98 |
The current dividend yield is good with dividend growth has stopped at the present time. The dividend yield is good (5% to 6% ranges) at 5.68%. The 5 year median dividend yield is also good at 5.31%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 4.24% and 3.06%. The Dividends have been increasing at a low rate (below 8% per year) at 3.42% per year over the past 5 years. The last dividend increase was in 2022. I would suspect that when the DPR is back into a reasonable range, the company will again increase their dividends.
The Dividend Payout Ratios (DPR) need improving. The DPR for 2024 for Earnings per Share (EPS) is too high at 55% with 5 year coverage at 56%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 55% with 5 year coverage at 56%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 23% with 5 year coverage at 26%. The DPR for 2024 for Free Cash Flow (FCF) is high at 55% with 5 year coverage at 82%. However, there is no agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 55.26% | 56.25% |
| AEPS | 55.26% | 56.25% |
| CFPS | 22.60% | 25.95% |
| FCF | 55.17% | 82.34% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.34 and currently at 0.36. The Liquidity Ratio for 2024 is good at 2.65 and 2.65 currently. The Debt Ratio for 2024 is good at 2.69and 2.69 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.59 and 0.59 and currently at 1.59 and 0.59.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.34 | 0.36 |
| Intang/GW | 0.31 | 0.43 |
| Liquidity | 2.65 | 2.65 |
| Liq. + CF | 3.32 | 2.96 |
| Debt Ratio | 2.69 | 2.69 |
| Leverage | 1.59 | 1.59 |
| D/E Ratio | 0.59 | 0.59 |
The Total Return per year is shown below for years of 5 to 34 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 3.42% | 4.12% | -1.08% | 5.20% |
| 2014 | 10 | 7.97% | -0.75% | -4.41% | 3.66% |
| 2009 | 15 | 12.69% | 15.90% | 9.22% | 6.67% |
| 2004 | 20 | 11.23% | 2.71% | -0.01% | 2.72% |
| 1999 | 25 | 10.67% | 4.86% | 2.30% | 2.56% |
| 1994 | 30 | 5.65% | 3.41% | 2.25% | |
| 1990 | 34 | 11.55% | 8.63% | 2.92% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.21, 10.03, 12.67. The corresponding 10 year ratios are 9.30, 10.84 and 12.88. The corresponding historical ratios are 9.21, 11.82 and 15.68. The current P/E Ratio is 6.97 based on a stock price of $7.25 and EPS estimate for 2025 of $1.04. 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.
I do have some Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.21, 10.03, 12.67. The corresponding 10 year ratios are 9.06, 10.43 and 12.71. The current P/AEPS ratio is 6.97 based on AEPS estimate for 2025 of $1.04. The current ratio is below the low ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. (Note: that this company only occasionally has Adjusted Earnings per Share.)
I get a Graham Price of $15.21. The 10-year low, median, and high median Price/Graham Price Ratios are 0.61, 0.74, $0.88. The current P/GP Ratio is 0.48 based on a stock price $7.25. 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.
I get a 10-year median Price/Book Value per Share Ratio of 1.05. The current ratio is 0.73 based on a Book Value of $3814M, Book Value per Share of $9.89 and a stock price of $7.25. 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 6.76. The current ratio is 3.42 based on Cash Flow for the last 12 months of $81.7M, Cash Flow per Share of $2.12 and a stock price of $7.25. The current ratio is 49% 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 3.06%. The current dividend yield is 5.79% based on dividends of $0.42 and stock price of $7.25. The current ratio is 89% 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 4.25%. The current dividend yield is 5.79% based on dividends of $0.42 and stock price of $7.25. The current ratio is 37% 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 0.62. The current P/S Ratio is 0.42 based on Revenue estimate for 2025 of $664.6M, Revenue per Share of $17.24, and a stock price of $7.25. 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 relatively cheap. The dividend yield tests say that the stock price is relatively cheap. This is confirmed by the P/S Ratio test. Other tests say the same thing.
When I look at analysts’ recommendations, I find Strong Buy (1), and Buy (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $13.00 with a high of $15.00 and low of $11.00. The consensus stock price of $13.00 implies a total return 85.10% with 79.31% from capital gains and 5.79% from dividends.
This stock is not well followed on Stock Chase. An entry in November 2024 gives it a partial buy. They like the stock but says it has head winds. Stock Chase gives this stock 4 stars out of 5. Adam Othman on Motley Fool says to buy to enhance the potential of your passive-income portfolio. Christopher Liew on Motley Fool says Exco maintains a positive outlook due to stable consumer demand for automotive vehicles in most markets. . The company put out a press release on Global Newswire about their results for their fourth quarter ending September 30, 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has two warnings out on this stock of earnings have declined by 3% per year over past 5 years; and significant insider selling over the past 3 months. None of the Executives nor the CEO I follow have sold shares in the past year.
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. Geographically, it derives a majority of its revenue from the United States and also has its presence in Canada, Europe, Asia, and other regions. Its web site is here Exco Technologies Ltd.
The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more on Wednesday, January 29, 2025 around 5 pm. Tomorrow on my other blog I will write about Trustworthy Finfluencers.... " target="_top" >learn more on Tuesday, January 28, 2025 around 5 pm.
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