I own this stock of Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF). I bought this company in 2008 because it is a dividend paying growth stock that would also be considered to be a small cap with a capitalization of around $115 million. It has great growth and it is information technology a favourite sector of mine. Because the stock grew rapidly and because it is a tech stock, I sold some shares in 2011 to lock in profit.
This used to be a great company. It provides services to the oil and gas industry and it has really stalled since 2015. It may be a tech company, but they work in the oil and gas industry so this can explain the slow down. This company has a financial reporting date of March 31.
Dividend yields have been moderate. The Current dividend yield is 3.97%, with 5 year, 10 year and historical dividend yields at 3.66%, 3.65 and 3.59%. Until recently dividend growth has been good. The 10 and 13 year dividend growth was at 17% and 26% per year. However, they have not raised dividends since 2015.
Their dividends have been flat since 2015 because they are paying out more than they are earning. The Dividend Payout Ratio for financial year ending in March 2018 is 153% with 5 year coverage at 121%. Analysts do not expect the DPR to be lower than 100% over the next couple of years. They are also paying out a high portion of their cash flow. DPR for CFPS for 2018 was 96% with 5 year coverage at 77%. I prefer this ratio to be 40% or less.
Debt ratios are very good. This is wise when you are in servicing the oil and gas industry. There is no long term debt. The Liquidity Ratio is 2.03 with 5 year median of 2.34. The Debt Ratio is 2.31 with 5 year median at 2.41. Leverage and Debt/Equity Ratios are 1.76 and 0.76 respectively with 5 year median ratios at 1.66 and 0.66.
The Total Return per year is show below for years of 5 to 21. 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 charts below.
As you can see from the chart below, this company grew quick rapidly until recently.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 4.56% | 1.82% | -2.07% | 3.89% |
| 10 | 17.28% | 27.29% | 18.45% | 8.83% |
| 13-15 | 25.92% | 42.70% | 28.82% | 13.88% |
| 20 | 28.99% | 22.91% | 6.07% | |
| 21 | 20.67% | 16.70% | 3.97% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 20.70, 31.79, and 37.95. The 10 year corresponding ratios are 21.01, 28.93 and 33.96. The corresponding historical ratios are 10.22, 13.48 and 17.22. The current P/E Ratios are 34.72 based on a stock price of $10.07 and 2019 EPS $0.29. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $2.13. The 10 year low, median and high median Price/Graham Price Ratios are 3.02, 4.04 and 4.51. The current P/GP Ratio is 4.74. This stock price testing suggests that the stock price is relatively expensive. These are rather high P/GP Ratios
I get a 10 year median Price/Book Value per Share of 12.53. The current P/B Ratio is 14.54 based on Book Value of $55,564M, Book Value per Share of $14.54 and a stock price of $10.07. The current ratio is some 16% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. When a P/B Ratio of 1.50 is a good one, the P/B Ratios on this stock is very high.
I get an historical median dividend yield of 3.59%. The current dividend yield is 3.97% based on dividends of $0.40 and a stock price of $10.07. The current dividend is some 11% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and above the median.
The 10 year median Price/Sales (Revenue) Ratio is 10.39. The current P/S Ratio is 10.32 based on 2019 Revenue estimate of $78.3M, Revenue per Share of $0.98 and a stock price $10.07. The current ratio is some 0.7% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
When I look at analysts’ recommendations I find Buy (3), Hold (3) and Underperform (2). The consensus would be a Hold. The 12 month consensus stock price is $9.97. This implies a total return of 2.98% with a capital loss of 0.99% and dividends of 3.97% based on a current stock price of $10.07.
The company has announced on Globe News Wire that the current CEO is stepping down this year and being replaced by Ryan Schneider. Gerald Huddleston on Simply Wall Street talks about their high DPR, but the company has never in the past cut their dividends. Lisa Matthews on Registrar Journal says this stock has been downgraded by Industrial Alliance Securities. See what analysts are saying on Stock Chase. It is a company not well covered by analysts. Veronika Hirsch thinks that it is would be a takeout target for Baker-Hughes (NYSE-BHGE).
Computer Modelling Group Ltd functions in the Canadian software industry. It specializes in integrated analysis and optimization, black oil and unconventional simulation, reservoir and production system modelling. Its web site is here Computer Modelling Group Ltd.
The last stock I wrote about was about was CI Financial Corp (TSX-CIX, OTC- CIFAF)... learn more. The next stock I will write about will be Parkland Fuel Corp (TSX-PKI, OTC-PKIUF)... learn more on Monday, June 25, 2018 around 5 pm.
This blog is meant for educational purposes only, and is not to provide investment advice. 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 website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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