The TSX-listed Canadian tech stocks we’ve identified have had an average Return on Equity (ROE) of 30.5% over the past 12 months
SmallCapPower | December 9, 2019: Return on Equity (ROE) is a measure of how effectively management is using a company’s assets to create profits and is calculated by dividing net income by shareholders’ equity. Technology companies are often characterized by rapid growth with the potential for big investor upside and typically do not have positive ROE because they reinvest their profits to grow the business. However, today we have discovered four TSX-listed Canadian tech stocks that have had a ROE over the Last Twelve Months (LTM) that exceeds 18%.
*Share price data as at December 5, 2019, data obtained from S&P Capital IQ
Evertz Technologies Limited (TSX:ET) – $18.13
Evertz designs, manufactures, and sells video infrastructure software and hardware for the production, post-production, broadcast, IPTV, and corporate A/V markets. It provides a full range of end-to-end solutions for operating a broadcast studio. The Company’s solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their multi-channel digital and high definition television (HDTV) and high bandwidth low latency Internet Protocol (IP) network environments, and by telecommunications and new-media companies.
- Market Cap: $1,388.9M
- 30-Day Return: -0.1%
- 90-Day Return: 0.0%
- 90-Day Average Trading Volume: 20,430
- LTM Return on Equity: 21.6%
Enghouse Systems Limited (TSX:ENGH) – $40.80
Enghouse Systems Limited develops and sells enterprise-oriented applications software worldwide. The Company operates through two main business segments: Interactive Management Group and Asset Management Group. The Interactive Management Group segment provides customer interaction software and services. Its technologies include contact center, attendant console, interactive voice response, dialers, agent performance optimization, and analytics that support various telephony environment. The Asset Management Group segment offers a portfolio of products to telecom service providers, utilities, and the oil and gas industry. Its products include operations support systems, business support systems, and mobile value-added services solutions, as well as data conversion services. On September 12, 2019, Enghouse reported Q3/19 financial results: EPS was $0.28 on revenue of $101.3M (which was up 14% QoQ), in-line with estimates of 0.28 and $103M.
- Market Cap: $2,231.5M
- 30-Day Return: +7.7%
- 90-Day Return: +5.6%
- 90-Day Average Trading Volume: 61,730
- LTM Return on Equity: 18.3%
Constellation Software Inc. (TSX:CSU) – $1,364.47
Constellation Software develops and sells software solutions that are targeted to customers in specific vertical markets. The Company’s segments include: Public sector and Private sector. The Public sector segment develops and distributes software solutions primarily to government and government-related customers. Its Public sector segment includes Volaris Operating Group, Harris Operating Group and Total Specific Solutions Operating Group. The Private sector segment develops and distributes software solutions primarily to commercial customers. Its Private sector segment includes Jonas Operating Group, Perseus Operating Group and Vela Operating Group. Constellation Software has more than 200 operating units, which compete in over 80 vertical markets. Constellation is an active acquirer, typically completing 40+ acquisitions each year.
- Market Cap: $28,915.2M
- 30-Day Return: +9.3%
- 90-Day Return: +5.1%
- 90-Day Average Trading Volume: 40,160
- LTM Return on Equity: +63.4%
CGI Inc. (TSX:GIB.A) – $108.80
CGI Inc is a Canada-based independent information technology (IT) and business consulting services company. The Company delivers an end-to-end portfolio of capabilities, from IT and business consulting to systems integration, outsourcing services and intellectual property solutions. CGI Inc works with clients through a local relationship model complemented by a global delivery network. On November 6, 2019, CGI reported Q4/19 financial results, highlighted by EPS of $1.21 (11% YoY growth) on Q4/19 revenue of $3.0B a 5.7% increase year-over-year.
- Market Cap: $29,148.8M
- 30-Day Return: +5.1%
- 90-Day Return: +4.2%
- 90-Day Average Trading Volume: 491,800
- LTM Return on Equity: 18.6%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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