Tecsys Inc (TSE: TCS) develops and sells enterprise supply chain management software for distribution, warehousing, transportation logistics, point-of-use, and order management.
It also provides related consulting, education, and support services. The company serves healthcare systems, services parts, third-party logistics, retail, and general wholesale distribution industries.
Earnings Results
The company recently reported earnings for its fourth quarter of Fiscal Year 2022. Earnings per share came in at C$0.17, which was above analysts’ consensus estimate of C$0.07. In the past nine quarters, Tecsys has beat estimates five times.
In addition, sales increased 6% year-over-year, with revenue hitting $34.3 million compared to $32.4 million. Revenue growth was primarily driven by a 40% increase in SaaS revenue.
Unfortunately, gross profit decreased by 4%, which means that the company wasn’t able to capitalize on its revenue growth. Indeed, the gross profit margin contracted from 49% to 44%.
Dividend
For income-oriented investors, TCS pays a 0.85% dividend yield on an annualized basis. When taking a look at TCS’ historical dividend yield, you can see that it has trended downwards:
At 0.85%, the current yield is on the low end of the range, indicating that income-oriented investors are paying a premium relative to yields they have been able to receive in the past.
Analyst Recommendations
Tecsys has a Moderate Buy rating based on one Buy assigned in the past three months. The average Tecsys price target of C$54 implies 62.4% upside potential.
Final Thoughts
Although Tecsys didn’t see stellar overall revenue growth, its SaaS sales are showing promise with its 40% growth rate. In addition, even though the company is not the best choice for income investors, the analyst following the stock believes it has the potential to deliver strong returns through stock price appreciation.
