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Stocks of technology company Tecsys Inc (TSX:TCS) have dropped nearly 39 per cent in the last three months. Does that mean it is time to lose interest in this stock?
A number of factors drive a stock’s long-term price trends, one of them being the company’s fundamentals. Hence, we will discuss Tecsys’ financial indicators and forecast to understand the upcoming trends for this software-based supply chain firm.
Tecsys Inc (TSX:TCS)
Tecsys engages in the development and retail of industrial supply chain solutions, logistics and order management. It also provides healthcare-related logistic solutions, services parts and general wholesale delivery services and primarily serves in North American regions.
The small-cap firm currently distributes a dividend of C$ 0.065 on a quarterly basis and holds a five-year dividend growth of 18.84 per cent.
The software stock yielded as much as 70 per cent in the past one year and surpassed the S&P/TSX Software Index in the same period. Its closing price on Friday, at C$ 40.89, was up by around 89 per cent from its 52-week low of C$ 21.67 (May 27, 2020).
But as mentioned earlier, the stock is currently marching in the bear market and down by almost 18 per cent year-to-date (YTD). It holds a return on equity (ROE) of 10.36 per cent (less than 50 per cent against its peers), and a price-to-book ratio of 8.9.
Tecsys' One-Year Price Against 20 Moving Average and Volume Trend Chart. (Source: EODHD/Others)
At the current price, Tecsys stock is trading almost six per cent below the 20 Moving Average, indicating a short-term downtrend. However, its price volume trend indicates a flat trajectory.
In the third quarter of fiscal 2021, the company’s Software-as-a-Service (SaaS) revenue rose by 89 per cent year-over-year (YoY) to C$ 4.7 million. Tecsys’ top line was up 19 per cent YoY to C$ 31.9 million in the latest quarter, as against C$ 26.7 million a year ago.
Tecsys’ Outlook 2021
The main concern for investors is likely to be Tecsys’ lower earnings per share (EPS), which stands at C$ 0.39. But the small-cap firm’s dividend payment distribution is offsetting its overall EPS.
The stock could rebound as the demand for SaaS-based logistic solutions and supply chain management is expected to rise amid the ongoing pandemic, led by the growing digital retail and health operations.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
