Update on ENGH.TO - Stocktrades Canada

Hello,

I was wondering if you could share your updated thoughts on Enghouse. It seems like there has been a downward trend in the stock price over the past few months however the 1 year price target has increased and I heard somewhere that they gave out a special dividend for holders recently. I listened to their last earnings call and I heard that a couple of their contracts were not being renewed this year but they were not overly concerned with it. I’m unsure what to make all of this moving forward and I’m going back and forth on whether to increase my position in the company over this year.

Thanks!

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Asked on January 5, 2021 6:29 am

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Private answer

Hey there.

The company did declare a special dividend of $1.50, as long as you own the stock prior to the ex-dividend date of January 13th 2021.

The company has a very strong cash position and zero debt, even with this special dividend. I think this will bode well for Enghouse moving forward, especially considering its acquisition heavy strategy.

The company posted some very good quarterly results, and all in all if I was a long term shareholder, I wouldn't be concerned at all. The height of the tech boom earlier in the year did leave this company trading at some pretty rich valuations.

But, it's gone through a healthy consolidation and is now trading more in line with what it typically has traded at over the last half decade in terms of price to earnings and sales.

Nothing has fundamentally changed with the company over the last while in our opinion, we just believe that valuations got a little bit extended back in mid-2020.

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Posted by Dan Kent

Answered on January 5, 2021 11:56 am

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