Cimatron Ltd. (NASDAQ: CIMT) is a leading provider of integrated CAD/CAM software solutions for the toolmaking and manufacturing industries. The company increased operating income 27% year-over-year in the first nine months of 2012. Cimatron continues to reward shareholders with a 5% dividend yield and growing profits.
Cimatron Ltd. Is an Israeli company that designs, develops, manufactures, markets, and supports computer-aided design/computer aided manufacturing (CAD/CAM) software products.
The Cimatron product line includes the CimatronE and GibbsCAM brands with software solutions for mold design, die design, electrode design, 2.5 to 5 Axis milling, wire EDM, turn, Mill-turn, rotary milling, multi-task machining, and tombstone machining. Cimatron’s subsidiaries and extensive distribution network serve and support customers in the automotive, aerospace, medical, consumer plastics, electronics, and other industries in over 40 countries worldwide.
Cimatron is a microcap with only $72 million in market cap and is followed by less than 5 Wall Street analysts. However, the stock price is up 138% in the last 52 weeks. The price driver is the continued growth and profitability of this tiny company.
Revenue in the third quarter of 2012 increased by 3% compared to the third quarter of 2011 on a constant currency basis, with the highest growth coming from North America, and a healthy growth in Europe, mainly in Germany and Italy.
The confidence in continued positive cash flows has allowed the company to announce 2 dividend payouts to shareholders in the past 3 months.
Cimatron recently announced that its Board of Directors has approved a cash distribution of approximately USD0.43 per share on outstanding ordinary shares, representing a total distribution of approximately USD4.0 million. Based on a quarterly dividend, Cimatron has a current dividend yield of 5.53 percent with a 51 percent payout ratio.
This distribution will be made from paid-in capital, following a court approval that was given in April 2012, allowing the distribution of up to USD1 million to Cimatron shareholders, and following a ruling that was recently obtained from the Israeli Tax Authority.
Revenues for the third quarter of 2012 were $9.5 million, compared to $9.6 million recorded in the third quarter of 2011. For the first nine months of 2012, revenues were $30.0 million, compared to $28.5 million in the same period of 2011.
Operating profit in the third quarter of 2012 was $0.7 million, the same as in the third quarter of 2011. In the first nine months of 2012, Cimatron recorded an operating profit of $3.4 million, compared to an operating profit of $2.2 million in the first nine months of 2011.
Net Profit for the third quarter of 2012 was $0.5 million, or $0.06 per diluted share, compared to a net profit of $0.0 million, or $0.00per diluted share, recorded in the same quarter of 2011. In the first nine months of 2012, net profit was $2.4 million, or $0.25 per diluted share, compared to a net profit of $1.2 million, or $0.13 per diluted share, in the first nine months of 2011.
Cimatron has a return on equity (ROE) of 22% compared to the software industry average of 14% in the trailing twelve months. In contrast, Cimatron is trading at a lower price earnings ratio (PE) of 18.9. The software industry average is currently showing a 38 PE.
Based on an increasing PE ratio more in line with the revenue and profit growth, Cimatron Ltd. (NASDAQ: CIMT) has a 12-month price target of $12.
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Greg Pugh, an income-investing expert, publishes a newsletter called Investing for Monthly Income.
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