NASDAQ:CBTC
$23.90
(3/18 4:00PM)
| Open | $0 |
Mkt Cap | $23.8 Million |
| High | $0 |
52Wk High | $26.00 |
| Low | $0 |
52Wk Low | $18.65 |
| Volume | 0 |
Avg Vol 10D | 100 |
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. CBT Financial Corporation (CBTC) 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 CBT Financial Corp 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 CBTC before making an investment decision.
CBTC Revenue
As a value investing shop, we are interested in seeing how CBTC's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 9 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.88x and the low end of the range at 1.39x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for CBTC of 1.06x is well below its normal historic Price to Sales levels. At a price of $23.90, CBTC is 36% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
CBTC Cash Earnings
Looking at CBTC specifically in their Cash Earnings capabilities, Ockham views CBTC as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 9 years of cash earnings levels for CBTC to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 27.07 and a 20.50 low over the same period.
Now that CBTC’s current price is $23.90 and its Price to Cash Earnings ratio is 15.72, we are very positive on its outlook from the cash earnings perspective. In fact, CBTC is now trading a full 34% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why CBTC has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.
CBTC Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.
When reviewing dividend yields for CBTC, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. CBTC’s estimated annual dividend is $1.20 resulting in a current dividend yield of 5.02%. The highest dividend yield from CBTC over recent history was 6.65% while the lowest dividend yield was 0.00%. It's hard not to notice that CBTC pays a current dividend yield that is 50.98% above the historical median. This peaks our interest since our analysis looks favorably upon dividend yields that are greater than the historical median.
