Thursday, February 19, 2009

Finning International Inc. 2

Today I am going to look at what analysts are saying about this stock (TSX-FTT). Is it a good buy now? The first thing I looked at was insider buying and selling. There was quite a bit of insider selling last May and June by the CEO and some Directors. Since then, there has been some buying. Management has signaled that they have faith in the company by increasing the dividend from $.36 a share to $.44, which is an increase of over 22%. I have updated my spreadsheet for the 4th Quarterly Report on this stock. This report is unaudited and I had to put some annual figures together using all the quarterly reports.

In looking at earnings, Finning had earnings of only $.55 for 2008, compared to $1.53 for 2007. The main cause was goodwill write off and restructuring. Analysts seem to feel that this company will not be back to the 2007 earnings until 2010. There is a wide variance in what people expect this company to earn.

As far as the ratings go on this stock, there are Strong Buy ratings, Buy ratings and Hold ratings on this stock. This mean rating on this stock is a Buy. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 9 is lower than the 5 year average of 22 and this point to a current good price. Also, the current yield is 3% against the 5 year average of 1.5% so this also points to a good price. A problem is the Graham price, which has come down considerable because of the low EPS. However, the last one of $17, which will return with better earnings, is better than the current price of $12.76. To me, the negative for this stock is the inconsistent cash flow.

Looking at the charts, I compared this stock with the TSX, TSX Industrials and Toromont Industries. Except for the 10 year period, it has done worse than all these. In the 10 year period is has just done worse than Toromont. The main reason is that this company has been hit hard by the latest bear market. There are probably lots of Buy ratings on this stock as analysts expect that it will do much better when this bear market is over.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is See my spreadsheet on this company at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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