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 analysts have lowered their estimates for both revenue and EPS. For Revenue the actuals revenue was at or above the estimates. See the chart below. For example, in 2020, the Revenue estimate for that year (2020) was $953M and the actual for 2020 was $963M.
| Estimates | 2018 | 2019 | 2020 | 2021 | 2022 | 2022 |
|---|---|---|---|---|---|---|
| 2018 | $873M | $898M | $929M | |||
| 2019 | $984M | $1038M | $1,102M | |||
| 2020 | $953M | $1,006M | $1,055M | |||
| 2021 | $965M | $1,006M | $1,055M | |||
| Actuals | $873M | $994M | $963M |
For EPS, the actuals came in below the estimates. Se the Chart Below. For example, the EPS estimates for the year 2020 was $0.76, then $0.83 then $0.62. The actual EPS for 2020 was $0.56.
| Estimates | 2018 | 2019 | 2020 | 2021 | 2022 | 2022 |
|---|---|---|---|---|---|---|
| 2018 | -$0.62 | $0.55 | $0.76 | |||
| 2019 | $0.58 | $0.83 | $0.95 | |||
| 2020 | $0.62 | $0.82 | $0.91 | |||
| 2021 | $0.72 | $0.76 | $0.92 | |||
| Actuals | -$0.62 | $0.12 | $0.56 |
The dividend yields are moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 2.38%. The 4 year median dividend yield is low (below 2%) at 1.94%. They have been paying dividends only for 4 years. The 4 year dividend increase is good (15% and above) at 15.8% per year. The last dividend increase was in 2021 and it was for 44%. Their record of dividends is inconsistent.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 32% with 4 year coverage at 357%. Analysts expect the DPR for EPS to be in 30% to 40% ranges going forward. The DPR for CFPS for 2020 is 9% with 4 year coverage at 41%. Analysts expect the DPR for CFPS to be in the 20% range going forward. The DPR for Free Cash Flow for 2020 is 5% with 4 year coverage at 21%
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is too high at 1.67. It has been coming down as the stock price has been rising. When this ratio is above 1.00 it means that the company’s long term debt is higher than the market cap of this stock. Because this stock is also a financial, I looked at what Assets they have to cover their long term debt. The Debt/Asset Ratio is 0.99. This means they do have enough assets to cover their debt, but barely. Other ratios to look at is Current Liabilities/Asset Ratio and it is 0.07. This ratio is low and therefore is a good ratio. The other thing to look at is Debt/Cash Flow Ratio. For this stock it is 3.54 and a ratio around 3 is fine.
The Liquidity Ratio for 2020 is 0.59. If you add in Cash Flow after dividends, it rises to a good ratio of 2.99. The Debt Ratio is rather low at 1.34, but this is a financial which tends to have lower Debt Ratios. Leverage and Debt/Equity Ratios for 2020 are 4.58 and 3.42. I would like these to be lower, but again, Financials tend to have higher ratios compared to other companies.
The Total Return per year is shown below for years of 5 to 9 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 15.83% | 7.88% | 0.21% | 7.68% |
| 2011 | 9 | 18.54% | 12.23% | 6.31% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.13, 18.88 and 24.64. The corresponding 9 year and historical ratios are 11.42, 15.25 and 19.07. The current P/E Ratio is 18.13 based on a stock price of $13.05 and EPS estimate for 2021 of 0.72. The current ratio is between the median and high of the 9 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $14.94. The 9 year low, median, and high median Price/Graham Price Ratios are 1.04, 1.30 and 1.57. The current ratio is 0.87 based on a stock price of $13.05. The current ratio is below the 9 year median ratio of 1.04. This stock price testing suggests that the stock price is relatively cheap.
I get a 9 year median Price/Book Value per Share Ratio of 1.23. The current P/B Ratio is 0.95 based on a Book Value of $5,688M, Book Value per Share of $13.78 and a stock price of $13.05. The current ratio is 23% below the 9 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 9 year median Price/Cash Flow per Share Ratio of 6.39. The current P/CF Ratio is 2.00 based on Cash Flow for last 12 months of $2,691M, Cash Flow per Share of $6.52 and a stock price of $13.05. The current ratio is 69% below the 9 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 4 year and historical median dividend yield of 1.94%. The current dividend yield is 2.38% based on a stock price of $13.05 and dividends of $0.25. The current dividend yield is 22% above the 4 year and historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 9 year median Price/Sales (Revenue) Ratio is 5.80. the current P/S Ratio is 5.58 based on Revenue estimate for 2021 of $965M, Revenue per Share of $2.34 and a stock price of $13.05. The current ratio is 4% below the 9 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is certainly reasonable and could be cheap. The dividend yield test is showing that the stock price is cheap, but we have only 4 years to go on. The P/S Ratio test is showing that the stock price is reasonable. The P/E Ratio test is also showing that the stock price is reasonable. The others are showing the stock price at cheap.
Is it a good company at a reasonable price? I think that this is an interesting company, but it is risky. The price would seem to be reasonable if not cheap. Dividends have inconsistent, but they are now growing.
When I look at analysts’ recommendations, I find Buy (4) and Hold (4). The consensus would be a Buy. The 12 month stock price is $15.72. This implies a total return of 22.84% with 20.46% from capital gains and 2.38% from dividends based on a current price of $13.05.
When I look at analysts’ recommendations last year, I found Strong Buy (1), Buy (8), and Underperform (1). The consensus is a Buy. The 12 month stock price consensus was $15.88. That implied a total return of 22.55% with 20.58% from capital gains and 1.97% from dividends based on a stock price of $13.17. What happened was a total return of 1.06% with a capital loss of 0.91% and dividends of 1.97%. So, recommendations were rather wide of their mark.
There have been no entries in 2021 on Stock Chase. However, in 2020 this company was a top pick. Ambrose O'Callaghan on Motley Fool thought this stock was a solid low risk buy in September 2021. Amy Legate-Wolfe Motley Fool thought buying this company was one way to invest in EV. The company recently announced on Newswire the launch of Element Connectivity Solutions. A Simply Wall Street report on Yahoo Finance talks about this company. They give warnings of a High Debt Level and an Unstable Dividend Track record.
Element Fleet Management provides management services and financing for commercial vehicle and equipment fleets. The company's suite of fleet management services deals with acquisition and financing, to program management and remarketing. 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 Neighbourly Pharmacy Inc (TSX-NBLY, OTC-none) ... learn more on Monday, December 27, 2021 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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