Latest news with #EFN
Yahoo
20-04-2025
- Business
- Yahoo
Can Element Fleet Management Corp.'s (TSE:EFN) ROE Continue To Surpass The Industry Average?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine Element Fleet Management Corp. (TSE:EFN), by way of a worked example. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital. We've discovered 1 warning sign about Element Fleet Management. View them for free. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Element Fleet Management is: 14% = US$387m ÷ US$2.8b (Based on the trailing twelve months to December 2024). The 'return' is the income the business earned over the last year. So, this means that for every CA$1 of its shareholder's investments, the company generates a profit of CA$0.14. View our latest analysis for Element Fleet Management By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As you can see in the graphic below, Element Fleet Management has a higher ROE than the average (8.6%) in the Commercial Services industry. That's clearly a positive. With that said, a high ROE doesn't always indicate high profitability. A higher proportion of debt in a company's capital structure may also result in a high ROE, where the high debt levels could be a huge risk . Most companies need money -- from somewhere -- to grow their profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used. It appears that Element Fleet Management makes extensive use of debt to improve its returns, because it has an alarmingly high debt to equity ratio of 3.06. Its ROE is respectable, but it's not so impressive once you consider all of the debt. Return on equity is useful for comparing the quality of different businesses. In our books, the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt. But when a business is high quality, the market often bids it up to a price that reflects this. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to take a peek at this data-rich interactive graph of forecasts for the company. If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
20-04-2025
- Business
- Yahoo
Can Element Fleet Management Corp.'s (TSE:EFN) ROE Continue To Surpass The Industry Average?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. We'll use ROE to examine Element Fleet Management Corp. (TSE:EFN), by way of a worked example. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital. We've discovered 1 warning sign about Element Fleet Management. View them for free. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Element Fleet Management is: 14% = US$387m ÷ US$2.8b (Based on the trailing twelve months to December 2024). The 'return' is the income the business earned over the last year. So, this means that for every CA$1 of its shareholder's investments, the company generates a profit of CA$0.14. View our latest analysis for Element Fleet Management By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As you can see in the graphic below, Element Fleet Management has a higher ROE than the average (8.6%) in the Commercial Services industry. That's clearly a positive. With that said, a high ROE doesn't always indicate high profitability. A higher proportion of debt in a company's capital structure may also result in a high ROE, where the high debt levels could be a huge risk . Most companies need money -- from somewhere -- to grow their profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used. It appears that Element Fleet Management makes extensive use of debt to improve its returns, because it has an alarmingly high debt to equity ratio of 3.06. Its ROE is respectable, but it's not so impressive once you consider all of the debt. Return on equity is useful for comparing the quality of different businesses. In our books, the highest quality companies have high return on equity, despite low debt. If two companies have the same ROE, then I would generally prefer the one with less debt. But when a business is high quality, the market often bids it up to a price that reflects this. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to take a peek at this data-rich interactive graph of forecasts for the company. If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
12-04-2025
- Automotive
- Yahoo
Billionaire hedge fund manager issues ominous warning about Tesla: 'The valuation is incomprehensible'
A Swedish billionaire and hedge fund manager named Christer Gardell recently gave investors a dire warning: Tesla's valuation is poised to crash — and soon. Teslarati shared the details of Gardell's recent interview, which he conducted with finance news channel EFN. While Tesla is currently valued in the hundreds of billions, Gardell opined that this number is overinflated and can't hold forever. "The valuation is incomprehensible," he said. And considering the controversy and corresponding plunge in sales as a result of CEO Elon Musk's U.S. political involvement, Gardell said that a crash is almost certainly coming — possibly quite soon. "Tesla, especially now with the whole Musk circus going on everywhere, is probably the most expensive stock on the global stock exchanges right now," he said. "It could go down 95% – and maybe it should go down 95%." When asked about the time period that he anticipated for these changes, Gardell said: "It's always hard to say when. It could happen in a month, six months, a year, three years, or five years — it's impossible to answer." Tesla has introduced both AI and robotics into its portfolio, Teslarati explains, but it is still primarily a car maker — which is part of the reason that Gardell warns its valuation is far too high. For context, the other top automakers have valuations less than one-third of Tesla's, per Companies Market Cap. A true market crash could cause a wave of ripple effects. If investors become wary of backing the future-facing sustainable technologies like the ones at Tesla's, that could significantly hamper progress toward a cleaner future. That said, the issues with Tesla's sales numbers and valuation concerns are not rooted in its EV and battery tech being clean; in fact, that's a big reason why the company has been successful and deserves a strong value. The bigger issues are rooted in the aforementioned controversies Musk is at the center of, among other factors one could consider more typical for a company to face, such as recent recalls. Do you think Tesla's vehicles have lost some of their appeal? Definitely No way Some models — but not others For some drivers — but not others Click your choice to see results and speak your mind. For consumers looking at buying a Tesla, volatile and plummeting stocks may not be all bad news. Tesla has already been forced to adjust its financing and interest rates in order to entice buyers to move on their newer Cybertrucks, whose sales have been lagging. While Musk claimed that they would easily sell 500,000 units per year, so far sales are barely hitting 10% of that number. This may continue to lead to lowered prices and better financing deals not just at Tesla but potentially from competitors as well to keep up. Globally, the electric vehicle market is still surging as buyers opt for the long-term affordability and ease of EV ownership. In fact, Q4 of 2024 saw a new record for EV sales set in the U.S., per data from Cox Automotive. And fortunately for anyone looking to make the switch to an EV, there are plenty of affordable and reliable options from several other automakers, many of whom joined the EV race years ago to follow in Tesla's footsteps. And they've seen success; while Tesla still holds a top-two spot among EV makers worldwide, per the Motley Fool, the competition is working hard to catch up. For investors, Gardell advises, it may be wise to turn toward European stock markets instead. "The difference between American stocks and European stocks has never been greater," he said. Join our free newsletter for good news and useful tips, and don't miss this cool list of easy ways to help yourself while helping the planet.
Yahoo
28-03-2025
- Business
- Yahoo
An Intrinsic Calculation For Element Fleet Management Corp. (TSE:EFN) Suggests It's 32% Undervalued
Element Fleet Management's estimated fair value is CA$42.97 based on 2 Stage Free Cash Flow to Equity Element Fleet Management's CA$29.25 share price signals that it might be 32% undervalued The US$33.44 analyst price target for EFN is 22% less than our estimate of fair value How far off is Element Fleet Management Corp. (TSE:EFN) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. The end of cancer? These 15 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$574.1m US$646.9m US$701.2m US$747.4m US$787.1m US$822.0m US$853.3m US$882.0m US$909.1m US$935.1m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ 8.39% Est @ 6.58% Est @ 5.32% Est @ 4.43% Est @ 3.81% Est @ 3.37% Est @ 3.07% Est @ 2.86% Present Value ($, Millions) Discounted @ 8.4% US$530 US$551 US$551 US$542 US$526 US$507 US$486 US$463 US$440 US$418 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$5.0b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.4%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$935m× (1 + 2.4%) ÷ (8.4%– 2.4%) = US$16b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$16b÷ ( 1 + 8.4%)10= US$7.1b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$12b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of CA$29.3, the company appears quite undervalued at a 32% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Element Fleet Management as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.4%, which is based on a levered beta of 1.391. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Element Fleet Management Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings. Weakness Earnings growth over the past year is below its 5-year average. Dividend is low compared to the top 25% of dividend payers in the Commercial Services market. Opportunity Annual earnings are forecast to grow for the next 2 years. Good value based on P/E ratio and estimated fair value. Significant insider buying over the past 3 months. Threat Debt is not well covered by operating cash flow. Paying a dividend but company has no free cash flows. Annual earnings are forecast to grow slower than the Canadian market. Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Element Fleet Management, there are three pertinent elements you should assess: Risks: Case in point, we've spotted 1 warning sign for Element Fleet Management you should be aware of. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for EFN's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the TSX every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Associated Press
20-03-2025
- Automotive
- Associated Press
Element Announces Proposed Private Offering of Senior Notes
TORONTO, March 20, 2025 (GLOBE NEWSWIRE) -- Element Fleet Management Corp. (TSX: EFN) ('Element' or the 'Company'), the largest publicly traded pure-play automotive fleet manager in the world, today announced that it intends to sell senior unsecured notes (the 'Notes') in a proposed private offering that will not be registered under the Securities Act of 1933, as amended (the 'Securities Act'), subject to market and other conditions (the 'Notes Offering'). The Company intends to use the net proceeds from the Notes Offering for working capital and general corporate purposes, which may include the repayment of existing indebtedness. The Notes will not be registered under the Securities Act or any state securities laws in the United States and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and applicable state securities laws. Accordingly, the Notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act. Additionally, in Canada the offering will be made pursuant to exemptions from the prospectus requirements of applicable Canadian securities laws. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About Element Fleet Management Element Fleet Management (TSX: EFN) is the largest publicly traded pure-play automotive fleet manager in the world. As a Purpose-driven company, we provide a full range of sustainable and intelligent mobility solutions to optimize and enhance fleet performance for our clients across North America, Australia and New Zealand. Our services address every aspect of our clients' fleet requirements, from vehicle acquisition, maintenance, route optimization, risk management, and remarketing, to advising on decarbonization efforts, integration of electric vehicles and managing the complexity of gradual fleet electrification. Clients benefit from Element's expertise as one of the largest fleet solutions providers in its markets, offering economies of scale and insight used to reduce operating costs and enhance efficiency and performance. At Element, we maximize our clients' fleet so they can focus on growing their business. Contact: Rocco Colella (437) 349-3796 Forward-Looking Statements This press release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as 'may', 'will', 'expect', 'plan', 'anticipate', 'intend', 'potential', 'estimate', 'believe' or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements regarding the Notes Offering, including the intention to sell the Notes and the use of proceeds from the Notes Offering; Element's strategy to enhance and optimize the client experience and client acquisition and retention; Element's service offerings; enhancement of financial performance; reduction of operating expenses; increases in efficiency; EV strategy and capabilities; growth prospects and expected revenue growth; improvements to magnitude and quality of earnings; and expectations regarding financial performance. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause Element's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Such risks and uncertainties include those regarding the fleet management and finance industries, economic factors and many other factors beyond the control of Element. A discussion of the material risks and assumptions associated with this outlook can be found in Element's annual MD&A, and Annual Information Form for the year ended December 31, 2024, each of which has been filed on SEDAR+ and can be accessed at Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
