Monday, December 31, 2018

Element Fleet Management Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. This stock is considered to be a Financial Services stock. It also seems to be cheap. There is quite of bit of insider buying. Debt Ratios are not where I would like them to be. See my spreadsheet on Element Fleet Management Corp.

I do not own this stock of Element Fleet Management Corp (TSX-EFN, OTC-ELEEF). I was looking for stocks to follow and I found this stock in 100 best Dividend Stocks Money Sense for 2018.

When I was updating my spreadsheet, I noticed that the debt ratios were not good. See remarks below. The Comprehensive Income (which is really more important than the Net Income was low in 2016 and negative in 2017. This is not good. It is expected that there will be an earning loss this year and the third quarterly reports points that way. Problem for 2018 is that they will have to write off a big loan due them. Problem in 2017 was the writing off of two investments.

It is hard to say where they are going with dividends. They only started dividends in 2016 and so far, they have gone both up and down. The dividend yield is currently moderate at 2.59%. Dividends started quite low, but with all the changes, they are still up some 22% per year since starting.

The Dividend Payout Ratio for EPS for 2017 was 86%. Since they are not expected to earn anything this year, they will not be covering their dividends. In 2019 the DPR for EPS is expected to be around 33%. The total dividends paid exceed the total earnings, but only because the separation of ECN Capital Corp was considered to be a dividend. The DPR for CFPS is at 9.38% in 2017. This is a good ratio.

The Long Term Debt/Market Cap Ratio is very high in 2017 at 3.66 and even higher at 5.69 currently. This is a real problem over 1.00 (because the market is valuing it lower than what they think the company is worth via the stock price.) Some analysts think that anything over 0.50 is too high. The Liquidity Ratio has varied and not always over 1.50, but the one for 2017 was 1.51 with 5 year median at 1.56, but the current one is just 0.98. (Which means that the current assets cannot cover current debts.)

The debt ratio has varied and is often below 1.50 with the one for 2017 at 1.27 and the current one at 1.25. The Leverage and Debt/Equity Ratio for 2017 are high at 5.74 and 4.52. The current ones are higher at 6.32 and 5.07

The Total Return per year is show below for years of 5 to 6 to the end of 2017. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.

The dividends are so high because the separation of ECN Capital Corp was considered to be a dividend. By the way, if shareholders had kept their ECN shares (TSX-ECN), they are currently worth $3.43 per share. The dividend, as far as I can tell from the financial statements was worth $3.73.

Years Div. Gth Tot Ret Cap Gain Div.
5 21.64% 14.79% 6.55% 8.24%
6 20.03% 12.54% 7.49%


The total returns to date are a lot different. Over the past 5 years, shareholders would have lost money. They would be ahead if they had the stock for 6 years instead.

Years Div. Gth Tot Ret Cap Gain Div.
5 21.64% -4.83% -12.40% 7.58%
6 9.25% 0.28% 8.97%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.11, 28.89 and 34.67. The corresponding 6 year ratios are 9.72, 11.61 and 13.50. The current P/E Ratio cannot be calculated because the 2018 EPS estimate is a loss. The P/E Ratio for 2019 is 12.64 based on a current stock price of $6.95 and 2019 EPS estimate of $0.55. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $6.89. The 6 year low, median, and high median Price/Graham Price Ratios are 1.12, 1.43 and 1.71. The current P/GP Ratio is 1.01 based on a stock price of $6.95. This stock price testing suggests that the stock price is relatively cheap.

I get a 6 year median Price/Book Value per Share Ratio of 1.18. The current P/B Ratio is 0.95 based on a Book Value of $2,772M, Book Value per Share of $7.28 and a stock price of $6.95. The current ratio is some 19% below the 6 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median and almost cheap.

I get an historical median dividend yield of 1.55% (with historical only covering some two years). The current yield is 2.59%. The current yield is some 67% above the short historical one. This stock price testing suggests that the stock price is relatively cheap.

The 6 year median Price/Sales (Revenue) Ratio is 8.71. The current P/S Ratio is 3.03 based on 2018 Revenue estimate of $873, Revenue per Share of $2.29 and a stock price of $6.95. The current P/S Ratio is some 65% below the 6 year median. This stock price testing suggests that the stock price is relatively cheap.

On an absolute basis a P/E Ratio of 12.64 is a reasonable one. Generally, a very good P/B Ratio is 1.50. when it is below 1.00, the stock is selling for less than the theoretical broke up value of the company and so points to a very good price. Most testing is showing as cheap or almost cheap. It would seem that this stock is selling at a good price.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (8), Hold (1) and Underperform (1). The consensus would be a buy. The 12 month stock price is $9.09. This implies a total return of 33.38%, with 30.79% from capital gains and 2.59% from dividends based on a current stock price of $6.95.

Cole Patterson on Simply Wall Street talks about insider buying. Steven Smith on Modern Readers talks about director insider buying shares in the company. David Jagielski |on Motley Fool thinks this might be a good stock to buy, but it has been inconsistent. See what analysts are saying about this stock on Stock Chase. Their head office is in Toronto, but apparently most of their business is in the US.

Element Fleet Management is a leading global fleet management company, providing world-class management services and financing for commercial vehicle and equipment fleets. Element's suite of fleet management services spans the total fleet lifecycle, from acquisition and financing to program management and remarketing – helping customers optimize performance and improve productivity. Its web site is here Element Fleet Management Corp.

The last stock I wrote about was about was write Bird Construction Inc. (TSX-BDT, OTC- BIRDF)... learn more. The next stock I will write about will be Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more on Wednesday, January 2, 2019 around 5 pm.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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