Arguable better than using earnings as a metric
SmallCapPower | August 18, 2016: Instead of using corporate performance or earnings to gauge return on investment, an arguably more effective metric is to use cash flow. That being said, the tech stocks on our list today have high cash flow return on investment (CFROI).
Computer Modelling Group Ltd (TSE:CMG) – $9.68
Computer Modelling Group Ltd. (CMG) is a Canada-based computer software technology company serving the oil and gas industry. The Company operates through the development and licensing of reservoir simulation software segment. It is a supplier of process reservoir modelling software with a blue chip customer base of international oil companies and technology centers in approximately 60 countries.
- Market Cap: 764,505,375
- FCF: 29,425,000
- Capital: 59,870,000
- CFROI: 49%
Descartes Systems Group Inc. (TSE:DSG) – $26.35
The Descartes Systems Group Inc. (Descartes) is a global provider of on-demand, cloud-based software-as-a-service (SaaS) solutions. The Company is focused on logistics and supply chain management business processes. Customers use its modular, SaaS solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; file customs and security documents for imports and exports; research and perform trade tariff and duty calculations and complete other logistics processes.
- Market Cap: 1,996,333,548
- FCF: 70,681,842
- Capital: 542,257,169
- CFROI: 13%
Enghouse Systems Ltd. (TSE:ESL) – $53.20
Enghouse Systems Limited is a Canada-based company that develops enterprise software solutions. The Company has two business segments: the Interactive Management Group and the Asset Management Group. The Interactive Management Group specializes in customer interaction software and services. Its core technologies include contact center, attendant console, interactive voice response, dialers, agent performance optimization and analytics that support any telephony environment, deployed on premise or in the cloud. The Asset Management Group provides a portfolio of products to telecom service providers, utilities and the oil and gas industry, such as telecom billing, intelligent routing, number portability, network asset management, geographic information systems (GIS), wholesale revenue management solutions and data conversion services.
- Market Cap: 215,285,203.21
- FCF: 43,501,000
- Capital: 246,804,000
- CFROI: 18%
Sierra Wireless Inc. (TSE:SW) – $18.64
Communications & Networking
Sierra Wireless, Inc. offers second generation (2G), third generation (3G) and fourth generation (4G) cellular embedded wireless modules and gateways. The Company offers products to original equipment manufacturers (OEMs) and enterprises. It operates through three segments: OEM Solutions, Enterprise Solutions, and Cloud and Connectivity Services.
- Market Cap: 114,570,744.63
- FCF: 38,934,289
- Capital: 458,732,900
- CFROI: 8%