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Research Report

Investing gurus like the hard data of software small cap Enghouse Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

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Ontario-based small-cap Enghouse Systems Ltd. provides enterprise software solutions used in a variety of markets and industries, ranging from customer service to energy to transportation. It has a market cap of $705-million.

Enghouse has grown earnings at a 37-per-cent pace over long term and sales at a 20-per-cent pace (using average of 3,4, and 5-year EPS/sales growth rates).

Enghouse's 30.8 P/E may seem high, but given the firm's growth, it isn't exorbitant. That P/E and the long-term growth rate make for a 0.84 PE-to-growth ratio, which the Peter Lynch-based model likes.

Strong 94 relative strength over the past year shows excellent momentum, part of why the Motley Fool-based and Momentum Investor models have interest in the stock.

Enghouse has stellar 46.4-per-cent return on capital, which the Joel Greenblatt model likes.

It has no long term debt and its 14-per-cent return on equity is double the industry average.

Enghouse has impressive 15-per-cent profit margins and also offers a 1.2-per-cent dividend, which is a bit of a bonus.

Click here for a complete breakdown of Validea’s investing guru report.

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