NASDAQ:CATC
$29.35
(3/12 8:10PM)
-3.8%
| Open | $29.35 |
Mkt Cap | $110.0 Million |
| High | $29.35 |
52Wk High | $31.45 |
| Low | $29.35 |
52Wk Low | $22.00 |
| Volume | 100 |
Avg Vol 10D | 700 |
A Word Of Caution
While we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. Cambridge Bancorp (CATC) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.
While this company may not get as much press because of its small size, please take a moment to look at the RazorWire feed on the right hand side of the report. Any time Cambridge Bancorp is mentioned on business television or influential blogs a clip of that will be displayed. This helps to bring you up to speed on any major issues they are facing right now, both positive or negative.
Therefore, (and as always), check additional sources and available information regarding CATC before making an investment decision.
Ockham's Rating/Recommendation Summary
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CATC Revenue
For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CATC through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 9 years are 3.01x and 2.22x respectively.
Utilizing this range we can see that CATC’s current Price to Sales per share ratio of 1.79x is significantly below its average levels historically. In fact, with a current price of $29.35, CATC is a full 32% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for CATC.
CATC Cash Earnings
As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently CATC is significantly below its historical average multiple of Cash Earnings. Looking at the last 9 years we can get a good understanding of what investors have grown to expect from CATC. For example, CATC's Cash Earnings ratio per share has fluctuated between 14.34 and 19.45 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where CATC is with respect to prior business periods.
So with CATC's current price (latest close of $29.35) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, CATC is 30% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with CATC.
CATC Dividends
A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.
Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from CATC against the historic high and low levels over an available data range. Because CATC has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In CATC’s case, the estimated annual dividend is $1.40 producing a current dividend yield of 4.77%. The highest dividend yield from CATC in recent history was 14.47% while the lowest dividend yield was 0.00%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as CATC that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 34.07% below the median yield.
