Is it a good company at a reasonable price? This company is connected with the Oil and Gas industry, so it is going to be cyclical. Currently it seems to be cheap. Its dividend is moderate, but there have been dividends cuts in the past so dividends are unstable. There is certainly a risk in buying this small company. It does seem to be doing better currently than it has for a while. But it is relatively cheap so perhaps there is some gains to be made here.
I do not own this stock of Pason Systems Inc (TSX-PSI, OTC-PSYTF). I read a report on this stock in the Buy and Sell Advisor in September 2013. I had not heard of this dividend growth company before so I decided to investigate it.
When I was updating my spreadsheet, I noticed that this stock has done better in the last 5 years than in the last 10 years. See chart below.
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 second quarter in 2025 and expected growth over this year. You can see that most growth is lower over the past 10 years than over the past 5 years.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 40.08% | 6.97% | 2.16% | <-12 mths |
| 5 | FFO Growth | 25.19% | 4.60% | -12.80% | <-12 mths |
| 5 | Net Income Growth | 124.54% | 17.56% | -39.31% | <-12 mths |
| 5 | Cash Flow Growth | 13.49% | 2.56% | 2.58% | <-12 mths |
| 5 | Dividend Growth | -29.73% | -6.81% | 0.00% | <-12 mths |
| 5 | Stock Price Growth | 3.81% | 0.75% | -14.03% | <-12 mths |
| 10 | Revenue Growth | -17.05% | -1.85% | -0.47% | <-this year |
| 10 | FFO Growth | -39.48% | -4.90% | -12.80% | <-this year |
| 10 | Net Income Growth | 8.39% | 0.81% | -44.83% | <-this year |
| 10 | Cash Flow Growth | -42.32% | -5.35% | 2.40% | <-this year |
| 10 | Dividend Growth | -14.75% | -1.58% | 0.00% | <-this year |
| 10 | Stock Price Growth | -37.83% | -4.64% | 5.80% | <-this year |
If you had invested in this company in December 2014, for $1,006.94 you would have bought 46 shares at $21.89 per share. In December 2024, after 10 years you would have received $253.92 in dividends. The stock would be worth $626.06. Your total return would have been $879.98. This would be a total loss of 1.56% per year with 4.65% from capital loss and 3.09% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.89 | $1,006.94 | 46 | 10 | $253.92 | $626.06 | $879.98 |
If you had invested in this company in December 2019, for $1,009.47 you would have bought 77 shares at $13.11 per share. In December 2024, after 5 years you would have received $157.08 in dividends. The stock would be worth $1,047.97. Your total return would have been $1,205.05. This would be a total gain of 3.80% per year with 0.75% from capital gains and 3.05% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $13.11 | $1,009.47 | 77 | 5 | $157.08 | $1,047.97 | $1,205.05 |
The current dividend yield is moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% range) at 4.33%. The 5, 10 and historical dividend yields are also moderate at 3.31%, 3.51% and 2.51%. The dividend growth over the past 5 years is negative. Dividends are down by 6.8% per year. However, after an over 70% decrease in dividends in 2020, the company started to raise dividends in 2022. They did increases in 2023 and 2024. The last dividend increase was in 2024 and it was for 8.3%. Dividends were not raised yet in 2025.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 34% with 5 year coverage at 45%. The DPR for 2024 for Funds from Operations (FFO) is good at 32% with 5 year coverage at 41%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 32% with 5 year coverage at 31%. The DPR for 2024 for Free Cash Flow (FCF) is high at 72% with 5 year coverage at 61%. The FCF value for 2024 vary from $56.7M to $38.7M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 34.21% | 45.13% |
| FFO | 31.71% | 40.51% |
| CFPS | 31.50% | 30.96% |
| FCF | 72.84% | 61.31% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.03 and currently at 0.01. The Liquidity Ratio for 2024 is good at 2.43 and 2.57 currently. The Debt Ratio for 2024 is good at 5.17 and 5.64 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.22 and 0.24 and currently at 1.19 and 0.21.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.03 | 0.01 |
| Intang/GW | 0.20 | 0.22 |
| Liquidity | 2.43 | 2.57 |
| Liq. + CF | 3.41 | 3.85 |
| Debt Ratio | 5.17 | 5.64 |
| Leverage | 1.22 | 1.19 |
| D/E Ratio | 0.24 | 0.21 |
The Total Return per year is shown below for years of 5 to 28 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 | -6.81% | 3.80% | 0.75% | 3.05% |
| 2014 | 10 | -1.58% | -1.56% | -4.64% | 3.09% |
| 2009 | 15 | 5.29% | 5.23% | 1.04% | 4.18% |
| 2004 | 20 | 7.40% | 5.56% | 1.95% | 3.61% |
| 1999 | 25 | 13.71% | 14.41% | 9.05% | 5.36% |
| 1996 | 28 | 18.40% | 12.25% | 6.15% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.09, 11.46 and 13.88. The corresponding 10 year ratios are 13.74, 17.37 and 21.02. The corresponding historical ratios are 13.33, 19.64 and 24.27. The current ratio is 13.85 based on a stock price of $11.70 and EPS estimate for 2025 of $0.85. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I have Fund from Operations (FFO) data. The 5-year low, median, and high median Price/ Fund from Operations Ratios are 7.88, 9.57 and 11.27. The corresponding 10 year ratios are 10.04, 12.92 and 15.56. The corresponding historical ratios are 9.30, 11.56 and 13.95. The current ratio is 8.18 based on a stock price of $11.70 and FFO for the last 12 months of $1.43. The current 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 Graham Price of $10.85. The 10-year low, median, and high median Price/Graham Price Ratios are 1.79, 2.24 and 2.70. The current ratio is 1.08 based on a stock price of $11.70. The current ratio is 1.08 based on a stock price of $11.70. The current 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 3.23. The current ratio is 1.89 based on a Book Value of $484.5M, Book Value per Share of $6.19 and a stock price of $ 11.70. The current ratio is 42% 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 13.01. The current ratio is 7.25 based on Cash Flow per Share estimate for 2025 of $1.61, Cash Flow of $126.2M and a stock price of $11.70. The current ratio is 44% 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 2.51%. The current dividend yield is 4.44% based on dividends of $0.52 and a stock price of $11.70. The current dividend yield is 77% 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 3.51%. The current dividend yield is 4.44% based on dividends of $0.52 and a stock price of $11.70. The current dividend yield is 27% 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 4.94. The current P/S Ratio is 2.22 based on Revenue estimate for 2025 of $412.2M, Revenue per Share of $5.27 and a stock price of $11.70. The current ratio is 55% 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. It is confirmed by P/S Ratio test. This is a very clear test result. The other tests, except for the P/E Ratio test, is showing the stock price as cheap. The P/E Ratio test says it is reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1), Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $14.40 with a high of $17.00 and low of $13.00. The consensus stock price implies total return of 27.52% with 23.08% from capital gain and 4.44% from dividends based on a current stock price of $11.70.
This stock is not well covered on Stock Chase. The last entry, which covers this stock well, is dated in 2024. They gave a current recommendation of a Hold, but expected the stock to perform better in the future. Jitendra Parashar on Motley Fool thought this stock is undervalued and overlooked. Christopher Liew on Motley Fool thought in April that this was trading below its fair value. The company put out a press release via newswire about its fourth quarter of 2024. The company put out a press release via Newswire about their second quarter of 2025.
Simply Wall Street via Yahoo Finance talk about institutions owning 51% of this company. Simply Wall Street has two warnings out on this stock of profit margins (17.4%) are lower than last year (30.1%); and unstable dividend track record
Pason Systems Inc is a provider of instrumentation and data management systems for drilling rigs. The company reports on three strategic business units: The North American (Canada and the United States) and International (Latin America, including Mexico, Offshore, the Eastern Hemisphere, and the Middle East) business units, all of which offer technology services to the oil and gas industry, and the Solar and Energy Storage business unit, which provides technology services to solar and energy storage developers. Its web site is here Pason Systems Inc.
The last stock I wrote about was about was Medtronic PLC (NYSE-MDT) ... learn more. The next stock I will write about will be Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more on Wednesday, October 15, 2025 around 5 pm. Tomorrow on my other blog I will write about Retirement Taxes.... learn more on Tuesday, October 14, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment