# Calian Technologies (CTY.TO)



## Banalanal (Mar 28, 2011)

Calian Technologies. CTY.to

I want to get better at dissecting companies from a value oriented, and when possible, dividend growth framework. If you will indulge me, go through your common steps when evaluating an equity.

Here's what I like:
1. I've read through their site, and I get a general good feeling of a company focused on intelligent growth with shareholders in mind.
2. Roughly 2/3rds of profits derive from international sources.
3. It's growing their dividend at a strong rate consecutively over 6 years.
4. I've got their debt/equity at 56% for 2010, reasonable
5. No negative fcf in the last 3 years
6. 22% roe over a 6 year average
7. They secured a contract with the CDN gov in February 
8. It a has a p/e of 10.5
9. Dividend of 5.5%

I use Morningstar for most of my metrics and financials. Why did the FCF drop so dramatically in 2010? An acquistion? 

So it would be educational for me to have others evaluate this equity in hopes of becoming better at quantitative analysis.


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## Argonaut (Dec 7, 2010)

The liquidity is too low. 380 shares crossed the table on Friday, and yes that's three digits. That's not good for an $18 stock.


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## Banalanal (Mar 28, 2011)

Wow that does seem very low. Could you explain to me the fundamental problem with that? Any other concerns that stand out to you?


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## KaeJS (Sep 28, 2010)

Argonaut said:


> The liquidity is too low. 380 shares crossed the table on Friday, and yes that's three digits. That's not good for an $18 stock.


^ This.
And the fact that the stock is fairly stagnant (which is also probably partly due to low volume)

The problem with low volume (or an "illiquid") security is that:

A) The spreads between prices may be greater. For instance. Someone may want to buy at $18.20, but there may not be a seller at a price below $18.60. This means somebody is going to have to cave in, or you'll wait until a "trade agreement" is met among prices. 

B) The security doesn't move upward very fast because there are not a lot of buyers/sellers. 

It looks like people just buy this thing to hold on for the yield.

Their EPS for the past 5 quarters ranges from 0.40 - 0.49, and its not going up. Its actually slightly declining from what it looks like.

To me, this stock does not look intriguing on a technical or fundamental analysis.

It pays a nice dividend, but it's not worth buying IMO.

I rather buy something like JE.TO. It's cheaper. More liquid. Has upside potential, an pays a better dividend than CTY.TO. The downside to JE.TO is that it has some risk in that it relies on prices of natural gas...

But, if you're a believer that Nat Gas is going to go up in the future (like i am) then it isnt a cause for concern.

Disclaimer: I own JE.TO


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## Banalanal (Mar 28, 2011)

Alright I'm going to play devil's advocate just to try to learn more.

1. In regards to larger price spreads on low volume:
If I plan on holding onto this stock as it pays a strong dividend, is growing that dividend, and its focus on expanding its company and securing more contracts makes this a long term hold for me which makes difficulties in less buyers when I want to sell a minimal issue.

2. For a company that relies on securing, often longer term contracts, for its business, I'm not sure that a 5 quarter EPS evaluation is substantial enough. Its 5 year EPS is of course, upward, though not sky high, and Morningstar has it at 11%.


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## hypo (Aug 11, 2010)

> 1. In regards to larger price spreads on low volume:
> If I plan on holding onto this stock as it pays a strong dividend, is growing that dividend, and its focus on expanding its company and securing more contracts makes this a long term hold for me which makes difficulties in less buyers when I want to sell a minimal issue.


KaeJS is a trader, so stuff like bid-ask spreads are a lot more important in his situation. If you are doing a buy and hold type thing, then its not as big a deal b/c you are looking at the big picture. Low liquidity generally comes with the territory of small or microcaps. Having said that, lol @380 shares.

Again, you've got to look at the numbers in comparison with their nearest competitors. You can't look at them in isolation. As close to an apples to apples comparison is best.


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## Ethan (Aug 8, 2010)

I wouldn't focus too much on the 380 shares traded on Friday, CTY averages 9,941 shares traded/day. That's the volume number you should focus on, the 380 appears to be an anomaly.


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## Argonaut (Dec 7, 2010)

Reuters lists average volume of 2857. In either case it's very light. Liquidity is very important, even for buy and hold investors. Kae has listed some good reasons.


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## CanadianCapitalist (Mar 31, 2009)

Isn't this Ottawa Mayor Larry O'Brien's company? If the way Larry ran Ottawa is how his business is run, I wouldn't like the stock's chances! (j/k)


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## J3ff (Mar 20, 2011)

hypo said:


> KaeJS is a trader, so stuff like bid-ask spreads are a lot more important in his situation. If you are doing a buy and hold type thing, then its not as big a deal b/c you are looking at the big picture. Low liquidity generally comes with the territory of small or microcaps. Having said that, lol @380 shares.





hypo said:


> Again, you've got to look at the numbers in comparison with their nearest competitors. You can't look at them in isolation. As close to an apples to apples comparison is best.


I agree with Hypno. Comparing the company to other companies is a great idea - this way you know how Calian stacks up to its competitors. I suggest building comp tables (comparable tables) based on the ratios you initially calculated. So basically compare Calian Technologies to 5-6 other competitors and their ratios. You can compare similar companies based on market capitalization and/or business function.

Here is Calian Technologies' industry information:
http://finance.yahoo.com/q/in?s=CTY.TO+Industry

If in fact the company can secure future contracts, generate additional revenue, control costs, and increase earnings - this stock may attract the attention of future investors. It appears though that YoY (year over year) earnings are slowing, their SED division not performing as well (from both a revenue and earnings standpoint) as in the past, and their BTS division growing slowly - not sure if this an altogether sound investment...(this is a very high level look at the company's financials)

I stand by this piece of advice - if you don't understand what the company does...don't invest in it. Period. This will save you a lot of heartache in the future.


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## Banalanal (Mar 28, 2011)

I'm really appreciating the analyses as I hope to improve. I'll give it some more thought and go over the feedback.


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## Hawkdog (Oct 26, 2012)

*Calian Technologies - CTY.T*

This came on my radar today.

Anyone following it?

Low float - approx 7mill
PE - under 12
yield 5%

history of increasing dividends 

Dividend Payment History

2012	2011	2010	2009	2008	2007	2006	2005	2004	2003 

Q1	$0.26	$0.22	$0.17	$0.15	$0.12	$0.10	$0.08	$0.08	$0.05	$0.04 

Q1 Special $1.00 

Q2	$0.26	$0.25	$0.20	$0.15	$0.12	$0.10	$0.08	$0.08	$0.05	$0.04 

Q3	$0.26	$0.25	$0.20	$0.17	$0.15	$0.10	$0.08	$0.08	$0.06	$0.04 

Q4	$0.28	$0.25	$0.22	$0.17	$0.15	$0.12	$0.09	$0.08	$0.06	$0.05


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## doctrine (Sep 30, 2011)

I keep my eye on it. I came pretty close to buying some last year. My only concern was limited revenue/earnings growth, but it seems like they'll have perhaps a 3-5% increase next year. They started from a very small payout though, so its virtually certain that growth will slow down.


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## Hawkdog (Oct 26, 2012)

Thanks for the input, i am going to keep it on my watch list for now.

cheers


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## gibor365 (Apr 1, 2011)

Hawkdog said:


> Thanks for the input, i am going to keep it on my watch list for now.
> 
> cheers


Did u buy it?
Interesting stock. payout 61%, P/E 11.5, yield more than 5.3%. The problem that I see is liquidity with averaage volume 5K , you need really to “hunt” to get good price. Looks like they increase dividends every 2-3 quarter.

Also I like that this is Technology company , I almost have very little exposure to this industry.
CTY has one of the highest ROEs of all companies in the Business Services industry. Breaking down the ROE, CTY has a profit margin of 5.87%, an asset turnover of 258.72 and leverage of 1.38.


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## doctrine (Sep 30, 2011)

The low EPS growth remains a concern. 

http://www.reuters.com/finance/stocks/CTY.TO/key-developments/article/2688625

They traded as low as $17 in 2011 so I'd be concerned that is the downside with limited upside.


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## londoncalling (Sep 17, 2011)

I have also been looking for a dividend payer/grower in this sector to add to my portfolio. I agree with Doctrine that the upside seems limited. However, I have been following it off and on for the past few months. Perhaps I should be watching it more closely. I have some stink bids out right now on a few other plays that may expire and get replaced with this one. I don't fear the lack of volume as I don't usually buy in large volumes.

cheers


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## londoncalling (Sep 17, 2011)

anyone still watching this? anybody own it?


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