Boyd Group Services Inc. (BYD-T)

In sideways, no-man's land. A laggard right now. Wait for signs that the trend is changing. Lower highs and lower lows, and that's not where you want to be.

Usually pretty steady business. Recent spike in insurance premiums, so the repair industry's been hit. BYD has been doing a tremendous job in this tough environment, gaining lots of market share. You can put off repairs for only so long; eventually there's a normalization of insurance premiums, and there will be an eventual catchup in submission rates. Yield is 0.3%.

Stands to benefit from tariffs, as there will be fewer write offs, which means more repair work.

It is now better to buy than before. Higher prices for repairs held people back but now they are more used to it. It has a better outlook ahead for the next 1 or 2 years. It has invested a lot in the  scanning and calibration business which is quite lucrative.

Growth plans are getting traction. Looks better than before. Because of a jump in the costs of car repairs last year, people deferred getting those repairs. So this business is coming back. Also, BYD's scanning and calibration business is growing, a lucrative one they used to outsource. Are building their own locations and buying fewer businesses, which give them a better return.

Based in Winnipeg, yet 90% of business comes from US. Pulled back, though always priced at a premium, so valuation is not strikingly attractive. Seeing less traffic due to mild weather and a weaker economy. Needs to renegotiate insurance contracts for increased labour costs. Providing more in-house services, which requires more up-front investment. On her radar.

BYD has faced recent weakness on slowing same-store sales, labour headwinds, and increased upfront expenses from greenfeield and brownfield investments. Its valuation is expensive given the companies historical trackrecord of execution and successfully integrating acquisitions. We think a reversal of the factors mentioned can push BYD back up to historical levels. We believe that these will reverse and analyst outlook calls for EPS to double next year, so we will be watching the upcoming earnings closely.
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90+% revenue comes from the US. Cashflow attributes are very strong. Continues to acquire. There are only so many rollups he's willing to invest in. Quite reasonable, but just hasn't made the cut for his portfolio. Nothing wrong with the company, but slightly dilutive on the share count and insider ownership not high.

A somewhat weak year, but good outlook for growth. Could add on pullback, but there are better ideas out there.

Weak, while NA markets are at highs. Tremendous success in the past making acquisitions, integrating, and increasing margins. That hasn't changed. Once a market darling, people got carried away. Speed of acquisition has slowed. 

Going forward, has technology to calibrate the increasing number of sensors on cars, which smaller shops don't. Needs to accelerate earnings growth.

It is OK for buying an initial position. It is at a 52 week low but issues are temporary. It is acquisition oriented and spending by insurance companies, etc. is heading up. The P/E has been perpetually high and it is range bound so it is better for trading.

Well positioned in the space. Extremely low valuation for the good market share it has in both Canada and the US. Getting to levels where it would be a buying opportunity.

It is at the support level and this could be the beginning of a base. The last piece is a bit of a resistance. If buying put a mental stop at the last trough because you don't want to see it broken.

BYD trades at a premium valuation of 37X forward earnings, and so there is room for multiple contraction, which can help explain some of the volatility recently. We consider BYD one of the higher quality names in the TSX, and it does have some near-term headwinds, but largely we do not feel the story has changed. 

Over the past 10 years its total return CAGR has been 20%, over the past five years, 9.7%, and the past three years 5.4%. Its recent momentum is not great, and we could see lower prices in the near-term, but for a long-term hold we would be quite comfortable holding this name.
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