Is it a good company at a reasonable price? The stock price may still be reasonable, but it is relatively high. The company is growing fast, but unevenly. It has a debt problem. It is a risky investment, but it will probably pay off well in the end. You should only invest in this company money you are willing to lose. The recent big increase in the dividend shows confidence of the management. However, insiders are not buying and not picking up their stock options. That is rather a mixed signal.
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 10 year growth is a lot higher than for the last 5 years. However, stock price has grown by 47% in 2022. Over the past 5 and 10 years, outstanding shares have grown at the rate of 1% and 20% per year.
| Year | Item | Growth |
|---|---|---|
| 5 | Revenue Growth | 3.98% |
| 5 | EPS Growth | -30.67% |
| 5 | Net Income Growth | -16.10% |
| 5 | Cash Flow Growth | 408.20% |
| 5 | Dividend Growth | 160.00% |
| 5 | Stock Price Growth | 4.21% |
| 10 | Revenue Growth | 16385.90% |
| 10 | EPS Growth | 236.36% |
| 10 | Net Income Growth | 5964.04% |
| 10 | Cash Flow Growth | 50645.31% |
| 5 | Dividend Growth | 160.00% |
| 10 | Stock Price Growth | 168.33% |
If you had invested in this company in December 2011, for $1,003.20 you would have bought 209 shares at $4.80 per share. In December 2021, after 10 years you would have received $1,046.00 in dividends. The stock would be worth $2,291.92. Your total return would have been $3,737.92.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $4.80 | $1,003.20 | 209 | 10 | $1,046.00 | $2,691.92 | $3,737.92 |
But if you had invested in this company in December 2006, for $1,001.16 you would have bought 81 shares at $12.36 per share. In December 2021, after 5 years you would have received $94.77 in dividends. The stock would be worth $1,043.28. Your total return would have been $1,138.05.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.36 | $1,001.16 | 81 | 5 | $94.77 | $1,043.28 | $1,138.05 |
The dividend yields are moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 2.13%. Dividends have only been paid for 6 years, including 2021, and the median dividend for the past 5 and historical years is low (below 2%) at 1.94%. The dividend increases for the past 5 years is good (15% or higher) at 21% per year. However, dividends have not been constant. There have been 3 years of increasing dividends and 1 year of decreasing dividends in the last 5 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 35% with 5 year coverage at 106%. The DPR for EPS is expected to be around 33% in 2022. I have Adjusted Earnings per Share data and the DPR for AEPS for 2021 is 31% with 5 year coverage at 29%. The DPR for Cash Flow per Share for 2021 is 11% with 5 year coverage at 10%. The DPR for Free Cash Flow (FCF) for 2021 is 5% with 5 year coverage at 11%. There is disagreement on what the FCF is, but values are close.
Company has a debt problem as debt is too high. The long Term Debt/Market Cap is 1.54. This is high as when it is over 1.00 it means that the long term debt is higher than the company’s market cap. I also have a Debt/Coverage Asset Ratio and for 2021 is it too high at 1.02. It is better for this year’s third quarter at 1.00. That means that the Assets Coverage and Long Term Debt equal each other. The Liquidity Ratio for 2021 is 0.54. However, if you add in Cash Flow after dividends, it is 2.41 and fine. The Debt Ratio is low at 1.36. I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 4.41 and 3.24. I prefer these to be below 3.00 and 2.00, respectively.
The Total Return per year is shown below for years of 5 to 10 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 21.06% | 2.69% | 0.83% | 1.87% |
| 2011 | 10 | 16.92% | 10.37% | 6.55% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.73, 18.88 and 24.64. The corresponding 10 year ratios are 14.43, 18.38 and 22.33. The corresponding historical ratios are 13.13, 17.88 and 20.03. The current P/E Ratio is 20.17 based on a stock price of $18.76 and EPS estimate for 2022 of $0.93. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.65, 12.44 and 16.24. The corresponding 10 year ratios are 9.22, 12.21 and 15.16. The current P/AEPS Ratio is 17.53 based on a stock price of $18.76 and AEPS estimate for 2022 of $1.07. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $12.90. The 10-year low, median, and high median Price/Graham Price Ratios are 1.09, 1.32 and 1.57. The current ratio is 1.45 based on a stock price of $18.76. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.28. The current P/B Ratio is 2.36 based on a stock price of $18.76, Book Value of $3,221M and a Book Value per Share of $2.27. The current ratio is 84% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.16. The current P/CF Ratio is 7.35 based on Cash Flow for the last 12 months of $1,033M, Cash Flow per Share of $2.55 and a stock price of $18.76. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield ( and 5 and 10 year median dividend yield) of 1.94%. The current dividend yield is 2.13% based on a dividend of $0.40 and a stock price of $18.76. The current dividend yield is 9.91% above the 5 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. (Dividends have only been paid for 5 years.)
The 10-year median Price/Sales (Revenue) Ratio is 5.21. The current P/S Ratio is 6.83 based on Revenue estimate for 2022 of $1.113M, Revenue per Share of $2.75 and a stock price of $18.76. The current ratio is 31% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price may still be reasonable but it is getting expensive. It is certainly above the median. The dividend yield test says it is reasonable, but it is not confirmed by the P/S Ratio test which says it is expensive. Other show it is reasonable and above the median or expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5) and Hold (1). The consensus is a Strong Buy. The 12 month stock price is $22.08. This implies a total return of $19.83% with 17.70% from capital gains and 2.13% from dividends based on a stock price of $18.76.
All the analyst’s recommendations are old on Stock Chase, but, they are positive. Stock Chase gives this stock 1 star out of 5. Christopher Liew on Motley Fool likes the recent dividend jump and the company’s cash flow. Jitendra Parashar on Motley Fool thinks this is a unstoppable dividend stock. The company put out a Press Release on their 2021 results. The company put out a Press Release on their third quarter results for 2022. Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street has two warnings of debt is not well covered by operating cash flow and 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 Friday, December 23, 2022 around 5 pm. Tomorrow on my other blog I will write about Dividend Investing .... learn more on Thursday, December 22, 2022 around 5 pm.
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