COMPUTER MODELLING GROUP (Toronto symbol CMG; www.cmgroup.com) sells consulting services and software that help oil and gas producers use advanced recovery techniques to get more out of their existing wells. The company has customers in over 50 countries and offices in Calgary, Houston, London, Caracas and Dubai.
In the three months ended March 31, 2013, Computer Modelling reported revenue of $19.3 million. That’s up 12.0% from $17.2 million a year earlier.
Earnings rose 9.6%, to $7.3 million from $6.6 million. Per-share earnings rose 5.6%, to $0.19 from $0.18, on more shares outstanding.
Computer Modelling holds cash of $59.4 million, or $1.56 a share, and has no debt. The company has just raised its dividend by 12.5%, to $0.18 a share from $0.16. The stock yields 3.1%. Computer Modelling also paid a special dividend of $0.05 a share on
June 14, 2013.
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Computer Modelling makes mostly recurring revenue from software licences and maintenance contracts for its products. That gives it long-term stability.
The company is already a leader in complex heavy oil and oil sands simulations. It should profit further as oil and natural gas producers continue to develop other unconventional sources, such as shale gas, coalbed methane and stranded gas.
In the latest edition of Stock Pickers Digest, we look at Computer Modelling’s financial outlook and especially its decision to raise its spending on research and development to even higher levels. We conclude with our clear buy-hold-sell advice on this stock.
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