Computer Modelling (CMG) AI Stock Analysis

• Market Cap: C$428.54M
• Dividend Yield: 2.33%
• Average Volume (3M): 246.83K
• Price to Earnings (P/E): 20.7
• Beta (1Y): 0.96
• Revenue Growth: 3.19%
• EPS Growth: -1.07%
• Country: CA
• Employees: 320
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.03
• Shares Outstanding: 82,730,000
• 10 Day Avg. Volume: 239,715
• 30 Day Avg. Volume: 246,827
• PEG Ratio: 1.12
• Price to Book (P/B): 12.11
• Price to Sales (P/S): 7.56
• P/FCF Ratio: 23.18
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$6.25
• Price Target Upside: 21.36% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: C$5.50 ▲(6.80% Upside)

The overall stock score of 69 reflects strong financial performance, with robust revenue growth and profitability. Technical analysis indicates a bearish trend, but potential stabilization is suggested by neutral RSI and positive stochastic indicators. Valuation is reasonable, though not significantly undervalued. The absence of earnings call and corporate events data limits additional insights.

Positive Factors

Revenue Growth

Strong revenue growth indicates expanding market reach and effective sales strategies, supporting long-term business sustainability.

Profit Margins

High profit margins reflect effective cost control and pricing power, which are crucial for maintaining profitability in competitive markets.

Leverage Management

Improved leverage management enhances financial stability and reduces risk, providing a solid foundation for future growth.

Negative Factors

Free Cash Flow Decline

Declining free cash flow growth may limit the company's ability to invest in new projects or return capital to shareholders, affecting long-term growth.

Margin Decline

A decline in margins suggests potential cost pressures or increased competition, which could erode profitability if not addressed.

Debt Reliance

Moderate reliance on debt increases financial risk, potentially impacting the company's ability to weather economic downturns or invest in growth opportunities.

Computer Modelling Business Overview & Revenue Model

Company Description

Computer Modelling Group Ltd., a computer software technology company, develops and licenses reservoir simulation software in Canada and internationally. The company offers CMOST-AI, an intelligent optimization and analysis tool that offers solution for reservoir by combining statistical analysis, machine learning, and non-biased data interpretation; IMEX, a black oil simulator that is used to model primary and secondary oil recovery processes in conventional and unconventional oil and gas reservoirs; GEM, an equation-of-state reservoir simulator for compositional, chemical, and unconventional reservoir modelling; STARS, a thermal and processes reservoir simulator for the modelling of steam, solvents, air, and chemical recovery processes; and CoFlow, a reservoir and production system modelling software that allows reservoir and production engineers to make informed decisions on large integrated oil and gas projects in Canada. It also provides Builder, a pre-processor that simplifies the creation of simulation models by providing a framework for data integration and workflow management between various data sources; Results, a post-processor that helps in enhancing understanding and insight into recovery processes and reservoir performance; WinProp, a fluid property characterization tool; and Autotune artificial intelligence solutions that tune the model for optimal run time. In addition, it offers professional services comprising specialized support, consulting, training, and contract research services. The company was founded in 1978 and is headquartered in Calgary, Canada.

How the Company Makes Money

CMG generates revenue primarily through the sale of software licenses and related services. The company offers different licensing models, including perpetual licenses and subscription-based services, which allow clients to access its advanced simulation software. Additionally, CMG earns income through professional services, such as training, consulting, and technical support, which help clients effectively implement and utilize their software solutions. Significant partnerships with major oil and gas companies enhance CMG's market presence and contribute to its revenue streams by fostering long-term relationships and enabling collaborative projects. Furthermore, the company invests in research and development to continuously innovate its offerings, ensuring it meets the evolving needs of the industry and maintains a competitive edge.

Computer Modelling Financial Statement Overview

Summary

Computer Modelling shows strong profitability with high margins and return on equity. However, recent declines in revenue and free cash flow present potential risks, despite improved leverage management.

Income Statement

Computer Modelling has shown strong profitability with a consistent gross profit margin above 75% and a net profit margin around 17% in the TTM. However, the recent revenue growth rate is negative, indicating a potential slowdown in sales. EBIT and EBITDA margins remain healthy, suggesting efficient operations despite the revenue decline.

Balance Sheet

The company's debt-to-equity ratio has improved over time, indicating better leverage management, currently at 0.45. Return on equity remains robust at 28.85% in the TTM, showcasing strong profitability relative to shareholder equity. However, the equity ratio is moderate, suggesting a balanced but not overly conservative capital structure.

Cash Flow

Operating cash flow to net income ratio is stable, reflecting consistent cash generation relative to earnings. However, free cash flow growth has been negative recently, which could be a concern if it persists. The free cash flow to net income ratio is high, indicating efficient conversion of earnings into free cash flow.

Breakdown	TTM	Dec 2024	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	129.29M	108.68M	129.45M	73.85M	66.20M	67.36M
Gross Profit	102.38M	91.45M	104.51M	56.69M	49.92M	51.67M
EBITDA	40.26M	42.47M	43.24M	29.51M	30.22M	34.84M
Net Income	20.73M	26.26M	22.44M	19.80M	18.41M	20.19M
Balance Sheet
Total Assets	192.59M	172.37M	204.76M	137.13M	125.15M	122.49M
Cash, Cash Equivalents and Short-Term Investments	33.16M	63.08M	43.88M	66.85M	59.66M	49.07M
Total Debt	37.76M	36.96M	38.58M	37.98M	39.59M	40.96M
Total Liabilities	102.95M	104.56M	118.85M	84.68M	78.43M	79.07M
Stockholders Equity	89.63M	67.81M	85.91M	52.45M	46.72M	43.42M
Cash Flow
Free Cash Flow	25.98M	35.43M	28.50M	23.83M	28.01M	26.03M
Operating Cash Flow	28.69M	36.08M	29.92M	25.88M	28.71M	26.43M
Investing Cash Flow	-48.01M	-23.46M	-37.96M	-2.05M	-703.00K	-397.00K
Financing Cash Flow	-12.24M	-16.38M	-13.67M	-16.64M	-17.42M	-17.47M

Computer Modelling Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 5.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CMG, the sentiment is Neutral. The current price of 5.15 is above the 20-day moving average (MA) of 5.09, below the 50-day MA of 5.26, and below the 200-day MA of 6.66, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 51.50 is Neutral, neither overbought nor oversold. The STOCH value of 68.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:CMG.

Computer Modelling Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CMG	69 Neutral	C$428.54M	20.72	25.64%	2.33%	3.19%	-1.07%
TCS	65 Neutral	C$468.08M	86.70	8.14%	1.07%	7.00%	110.62%
QIS	62 Neutral	C$58.55M	58.03	3.37%	―	1.46%	-65.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
URL	55 Neutral	C$119.57M	109.76	24.43%	―	20.62%	21.78%
IMP	50 Neutral	C$165.54M	-55.82	-14.10%	―	48.18%	-401.19%
ABXX	49 Neutral	C$61.56M	-2.34	-147.54%	―	-34.80%	-28.42%

Computer Modelling Corporate Events

Computer Modelling Group Reports Q2 Results and Strategic Moves

Computer Modelling Group Ltd. announced its second-quarter financial results, revealing a 2% increase in total revenue to $30.2 million, driven by a 19% growth from acquisitions despite a 17% organic decline. The company reported a 25% decrease in adjusted EBITDA and a 40% drop in earnings per share, highlighting challenges such as lower perpetual software license sales and reduced revenues from reservoir and production solutions. Despite these challenges, CMG Group strengthened its market position by acquiring SeisWare International Inc. and securing a multi-year licensing agreement with Shell. The company also announced a Normal Course Issuer Bid and closed a $100M credit facility to support strategic acquisitions and enhance its ability to navigate market volatility.

CMG Secures Multi-Year Licensing Deal with Shell for CoFlow™

Computer Modelling Group Ltd. (CMG) has signed a multi-year software licensing agreement with Shell for its suite of simulation solutions, including CoFlow™, marking a significant milestone in their long-term collaboration. This agreement highlights the transition of CoFlow™ from a research initiative to a commercial product, enhancing decision-making and operational efficiency for customers, and reinforcing CMG’s leadership in advanced simulation software.