Element Fleet Management Corp

Element Fleet Management Corp (TSX: EFN) is a Canada-based fleet management company. The Company provides a range of services across many asset types, helping clients in a variety of industries around the world increase productivity, mitigate risk and reduce total cost of ownership.

Why should investors book profit?

• Generating a lower return on shareholder’s money: Element Fleet Management Corp’s TTM ROE (common equity) stood at 9.9%, whereas peer’s median TTM ROE (Common equity) stood at 15.6%, implies that EFN is generating a lower return on the shareholder’s money and also EFN shareholders are having lack of competitive edge against the competition.

• Overvalued: EFN shares are relatively overvalued when compared with its peers. From the TTM Price to Earnings multiple standpoints, EFN shares are trading at a P/E of 18.49x, whereas peer’s median TTM P/E multiple stood at 13.21x, implies a premium of ~40% EFN shares are commanding over its peers, despite the company is generating a lower return on shareholder’s money.

Source: REFINITIV, Analysis by Kalkine Group

• Forming a Lower top and lower bottom pattern: On daily price chart, EFN shares are forming a lower top and a lower bottom price pattern, which is a bearish trend. Unless EFN shares moves above this bearish price channel, upside will be largely capped.

Technical price chart (as on December 29, 2021). Source: REFINITIV, Analysis by Kalkine Group

Stock recommendation

EFN shares are relatively overvalued against its peers, and amid rising uncertainties over the global financial market price correction could be deeper in EFN stocks. Further, EFN shares are hovering into a bearish channel and trading well below its crucial support levels of 200-day and 50-day SMAs. Hence, we recommend a “Sell” rating on “EFN” shares at the current market price of CAD 12.96 at 9:50 am Toronto time (as on December 30, 2021).

1-Year price chart (as on December 30, 2021). Source: REFINITIV, Analysis by Kalkine Group.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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