Sound bite for Twitter and StockTwits is: Dividend Paying Financial. The stock price is probably reasonable. It is hard to know where they will go on dividends and if this will become a dividend growth stock. However, it probably will. 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. It was also on Raymond James' top 19 Canadian stocks for 2019 list.
When I was updating my spreadsheet, I noticed that they are all over the place re dividends. The dividend cut was probably prompted by the earnings loss. They only have been giving out dividends since 2016 and they have increased and decreased them and given out a special dividend. Will this end up being a dividend growth stock? It is hard to tell at present.
Dividend yields have been low (under2%) to moderate (2 to 4% ranges). The current dividend is 1.64%. The 3 year median yield is 2.23%. It has been as high as 7.75% and as low as 0.76%. It is hard to know where dividends are going to go. They started dividends in 2016. In 2017 they were increased 150%, in 2018 they were increased by 20% and then in 2019 they were decreased by 40%. Does management know what they are doing?
The Dividend Payout Ratios are not what would like. The DPR for 2018 cannot be calculated because the company had an earnings loss. The 3 year DPR coverage for EPS is 348%. The DPR for CFPS for 2018 is 15% with 5 year coverage at 29%. They cannot cover the dividend via Free Cash Flow. FCF coverage cannot be calculated because of negative FCF.
Debt Ratios are fine for a financial firm. This is considered to be a financial stock, so you want to know how well the assets are coverage the debt. For this company, the ratio for 2018 is 0.96. So, this is fine. The Liquidity Ratio is 1.13 and the Debt Ratio is 1.29 for 2018. The Leverage and Debt/Equity Ratios for 2018 is 5.40 and 4.19. These are fine for a financial firm.
The Total Return per year is shown below for years of 5 to 7 to the end of 2018. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 73.21% | -4.85% | -12.43% | 7.58% |
| 2011 | 7 | 14.71% | 5.98% | 8.72% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.11, 28.89 and 34.67. The 7 year corresponding ratios are 1.82, 208 and 2.34. The current P/E Ratio is 18.97 based on a stock price of $11.00 and 2019 EPS estimate of $0.58. The current P/E ratio of 18.97 is probably high, so making this stock on the expensive side. I really cannot do any testing based on P/E Ratios of the past.
I get a Graham Price of $9.12. The 10 year low, median, and high median Price/Graham Price Ratios are 1.04, 1.30 and 1.35. The current P/GP Ratio is 1.21 based on a stock price of $11.00. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 7 year median Price/Book Value per Share Ratio of 1.17. The current P/B Ratio is 1.73 based on Book Value of $2,772M, Book Value per Share of $6.37 and a stock price of $11.00. The current ratio is 47% above the 7 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.23%. The current dividend yield is 1.64% based on dividends of $0.18 and a stock price of $11.00. The current yield us 37% below the historical (or 3 year) yield. This stock price testing suggests that the stock price is relatively expensive.
The 7 year median Price/Sales (Revenue) Ratio is 7.74. The current P/S Ratio is 4.87 based on 2019 Revenue estimate of $984M, Revenue per Share of $2.26 and a stock price of $11.00. The current ratio is 37% below the 7 year median. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably reasonable. The best test is the P/S Ratio testing and this is showing the stock price as cheap. The P/B Ratio testing is worrisome as it is showing the stock price as expensive because the Book Value has been falling sine 2016. The P/GP Ratio test is probably where the price is.
Is it a good company at a reasonable price? The price seems reasonable. However, this is a financial small cap and it is risky. It is also hard to say where they are going with dividends. It might be of interest in the future.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $13.78. This implies a total return of 26.91% with 25.27% from capital gains and 1.64% from dividends.
See what analysts are saying on Stock Chase. There are various opinions, but it is risky. David Jagielski on Motley Fool says he is uncertain about its long term outlook. A writer on Simply Wall Street says you could view the recent improvements as indicating that the business itself is getting better with time. Phillip Gast on Modern Readers says there have been a couple of Buy ratings recently.
Element Fleet Management is a global fleet management company, Element Fleet Management provides management services and financing for commercial vehicle and equipment fleets. Its web site is here Element Fleet Management Corp.
The last stock I wrote about was about was 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 Thursday, January 2, 2020 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Vialoux.... learn more on Tuesday, December 31, 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.
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