Is it a good company at a reasonable price? I think that they have too much debt and that is a negative. There has been low growth in Revenue over the past 5 years, but it seems to be picking up this year. A lot of analysts are positive about its future. The dividend yield tests are signaling a reasonable price, but it is not confirmed by the P/S Ratio test.
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 growth is slower over the past 5 years than over the past 10 years.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 18.91% | 3.52% |
| 5 | AEPS Growth | 28.92% | 5.21% |
| 5 | Net Income Growth | 164.89% | 21.51% |
| 5 | Cash Flow Growth | 4049.29% | 110.67% |
| 5 | Dividend Growth | 24.00% | 4.40% |
| 5 | Stock Price Growth | 94.21% | 14.20% |
| 10 | Revenue Growth | 2972.05% | 40.85% |
| 10 | AEPS Growth | 1437.50% | 31.43% |
| 10 | Net Income Growth | 6480.73% | 51.99% |
| 10 | Cash Flow Growth | 14278.70% | 64.35% |
| 6 | Dividend Growth | 210.00% | 17.54% |
| 10 | Stock Price Growth | 159.86% | 10.02% |
This company’s growth has been generally good over the past 12 month to the end of the third quarter of 2023 and it is expected to be good for this year. The only problem growth is with Cash Flow and that is expected to decline.
| Item | 12 Mths | This Year |
|---|---|---|
| Revenue Growth | 10.70% | 14.04% |
| AEPS Growth | 18.69% | 22.43% |
| Net Income Growth | 11.44% | 53.30% |
| Cash Flow Growth | -70.54% | -70.54% |
| Dividend Growth | 54.84% | 35.48% |
| Stock Price Growth | 20.11% | 38.86% |
The current dividend yield is moderate with dividend growth volatile. The current dividend yield is moderate (2% to 4% ranges) at 2.19%. The 5 and 6 year median dividend yields are low (below 2%) at 1.94% and 1.94%. The dividend growth over the past 5 years is low (below 8%) at 4.4% per year over the past 5 years. However, over the past 6 years dividends have grown in 4 of them and decreased in 1 of them. The last dividend increase was in 2023 and it was for 54.8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 33% with 5 year coverage at 70%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 29% with 5 year coverage at 29%. The DPR for 2022 for Cash Flow per Share (CFPS) is 4% with 5 year coverage at 7%. The DPR for 2022 for Free Cash Flow (FCF) is 94% with 5 year coverage at 11%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 32.98% | 70.29% |
| AEPS | 28.97% | 29.45% |
| CFPS | 3.63% | 7.12% |
| FCF | 94.48% | 11.38% |
They have too much debt and they should improve their Debt Ratios. The Long Term Debt/Market Cap Ratio for 2022 too high at 1.22 and currently at 1.19. The Liquidity Ratio for 2022 is too low at 0.60 and 0.49 currently. If you added in Cash Flow after dividends, the ratios the current ratio is fine at 2.43, but the current one is far too low at 0.84. This ratio needs to be 1.50 or higher. The Debt Ratio for 2022 is lower than what I like at 1.35 and 1.32 currently. The Leverage and Debt/Equity Ratios for 2022 are too high at 4.52 and 3.36 and currently at 4.55 and 3.44.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.22 | 1.19 |
| Intang/GW | 0.30 | 0.25 |
| Liquidity | 0.60 | 0.49 |
| Liq. + CF | 2.43 | 0.84 |
| Debt Ratio | 1.35 | 1.32 |
| Leverage | 4.52 | 4.55 |
| D/E Ratio | 3.36 | 3.44 |
The Total Return per year is shown below for years of 5 to 11 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 4.40% | 16.21% | 14.20% | 2.01% |
| 2012 | 10 | 20.75% | 15.37% | 10.02% | 5.35% |
| 2011 | 11 | 18.66% | 13.02% | 5.63% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.13, 17.88 and 20.79. The corresponding 10 year ratios are 14.43, 18.38 and 22.72. The corresponding historical ratios are 12.41, 17.06 and 20.41. The current P/E Ratio is 18.73 based on a stock price of $21.91 and EPS estimate for 2023 of $1.17. 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 (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.75, 12.59 and 16.43. The corresponding 10 year ratios are 9.91, 13.06 and 16.84. The current P/AEPS Ratio is 16.73 based on a stock price of $21.91 and AEPS estimate for 2023 of $1.31. 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 Graham Price of $16.43. The 10-year low, median, and high median Price/Graham Price Ratios are 0.69, 0.90 and 1.17. The current P/GP Ratio is 1.33 based on a stock price of $21.91. 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 10-year median Price/Book Value per Share Ratio of 1.34. The current P/B Ratio is 2.39 based on a Book Value of $3,959M, Book Value per Share of $9.16 and a stock price of $21.91. The current ratio is 79% 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 3.13. The current P/CF Ratio is 11.62 based on Cash Flow of $740M for the last 12 months, Cash Flow per Share of $1.89 and a stock price of $21.91. The current ratio is 271% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.94%. The current dividend yield is 2.19% based on dividends of $0.48 and a stock price of $21.91. The current dividend yield is 13% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 1.94%. The current dividend yield is 2.19% based on dividends of $0.48 and a stock price of $21.91. The current dividend yield is 13% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 5.06. The current P/S Ratio is 6.66 based on a Revenue estimate for 2023 of $1291M, Revenue per Share of $3.29 and a stock price of $21.91. The current ratio is 32% 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 is probably expensive, but might still be reasonable. The dividend yield tests say the stock price is reasonable, but this is not confirmed by the P/S Ratio test that says the stock price is relatively expensive. Other tests run from reasonable to expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $25.62, with a high of $31.00 and low of $22.00. The consensus of $25.62 implies a total return of 19.12% with 16.93% from capital gains and 2.19% from dividends.
There are a lot of recommendations on Stock Chase this stock and the analysts like this stock. Stock Chase gives this stock 4 stars out of 5. Aditya Raghunath on Motley Fool thinks this is a growth stock to get rich by. Amy Legate-Wolfe on Motley Fool thinks this stock is a strong investment choice. The company put out a press release on Newswire about their results for 2022. The company put out a press release on Newswire about their third quarter of 2023 results.
Simply Wall Street put out a report via Yahoo Finance on this stock. Simply Wall Street has two warnings on this stock of debt is not well covered by operating cash flow; and dividend of 2.17% is not well covered by cash flows. Simply Wall Street gives this stock 3 star and one half stars out of 5.
Element Fleet Management Corp is a fleet management company, providing services and financings for commercial vehicle and equipment fleets. The company operates in U.S., Canada, Mexico, Australia, and New Zealand. Its web site is here Element Fleet Management Corp.
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