– There seems to be a fair amount of interest in this Montreal-based
company judging by the number of questions we have received. You may not
know it, but you probably have its service on your TV set – Stingray
provides the content for a large number of music channels in the upper
ranges of your band.
As our reader points out, the stock has been a strong performer recently.
After falling as low as $7.19 last June, the shares have moved higher and
closed on Jan. 19 at $10.01.
The stock has a trailing 12-month price-earnings ratio of 124, which is
pricy by any standard. The company is growing, but not by enough to justify
that level of p/e. Second-quarter 2018 revenue (to Sept. 30) was up by
24.7%, which is a nice bump although not enough to support that level of
investor enthusiasm. Recurring revenue (the best kind for any business) was
85% of total revenue, and that, of course, is a real plus.
Adjusted net income for the quarter was $5.4 million ($0.10 per share)
compared with $5.4 million ($0.11 per share) the year before. Free cash
flow was $6.8 million, up from $5.4 million last year. The company pays a
dividend of $0.19 per year for a yield of 1.9%.
The company appears to be solid, and its revenue looks secure. However, as
mentioned, it looks expensive at this level. As a result, I would not
recommend buying at this time, but it’s worth keeping an eye on the shares.
If they pull back below $9 you may want to talk to your advisor to see if
it’s suitable for your portfolio. – G.P.
Gordon Pape is one of Canada’s best-known personal finance commentators and
investment experts. He is the publisher of
The Internet Wealth Builder and The Income Investornewsletters, which are available through the Building Wealth website.
For more information on subscriptions to Gordon Pape’s newsletters,
check the Building Wealth website.
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Notes and Disclaimer
© 2018 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned carry risk of loss, and no guarantee of
performance is made or implied. This information is not intended to provide
specific personalized advice including, without limitation, investment,
financial, legal, accounting, or tax advice. Always seek advice from your
own financial advisor before making investment decisions.
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