
TSE:FTT
This summary was created by AI, based on 5 opinions in the last 12 months.
Finning International, recognized as the largest Caterpillar dealer, has seen a solid performance with its stock price moving from $45 to higher levels. However, concerns have arisen as it currently trades at a high valuation amidst cyclical uncertainties in the market, particularly with infrastructure and energy in Canada. While some experts remain bullish on industrials, citing a favorable environment in phase 2 of the business cycle, there are warnings that the stock may be approaching its fair market value, and a correction could be imminent if it doesn't hold above $78. The prevailing sentiment indicates that while the company is poised for potential growth in a favorable economic period, a cautious approach is advised, suggesting buying at lower levels. Overall, the sentiment around Finning International is mixed, with an inclination towards a cautious outlook rather than aggressive investment at current rates.
End markets are in early stages of recovery, robust backlog. Really nice growth. Really good balance sheet. ROC is 17% for 2019. Good Q2 performance. Pretty cheap. Tailwinds from the macro story and efficiency gains. Decent dividend. Bluer chip name. Will do well over the next 1-2 years. Yield is 2.5%. (Analysts’ price target is $39.17.)
He fills the time to buy this company has passed. He had owned three years ago and sentiment is towards holding. Management has engineered a good turnaround. Pricing is improving for new equipment and he likes the model. He still owns a small holding. Infrastructure spending in the US will have to be seen.
Has a lot of respect for how management has turned the business around over the past number of years. Now there is more good news being priced into the business, and it is clear that it is past the worst. Now that this business bounces off the bottom, there are certain things that happen. Incremental margins are better, but free cash flow conversions actually are worse, because they now have to invest in net working capital to grow the business. He likes the company, and over the years they can do just fine, but it is not the risk/return that it was.
The world’s largest Caterpillar dealer. Their largest customers are public works. Mining is their 2nd largest. Mining industry capital spend has been in a nuclear winter since 2012, and is just coming out of that. Dividend yield of 2.8% per year and they’ve grown their dividend 8% per year (Analysts’ price target is $32.)