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Finning International (TSE:FTT)
TSX:FTT
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Finning International
(TSX:FTT)82Outperform
Positive Factors
Earnings and Valuation
Valuation is at the low end of its historical range and attractive compared to peers.
Free Cash Flow
Finning is experiencing positive and increasing free cash flow per share alongside revenue growth, a rare achievement for the company in the past 18 years.
Negative Factors
Product Support Revenues
Product support revenues had muted growth in recent quarters, and the previously targeted CAGR of 7% through 2025 was increasingly out of reach.
Finning International (FTT) vs. S&P 500 (SPY)
Market Cap
C$5.79B
Dividend Yield2.63%
Average Volume (3M)592.44K
Price to Earnings (P/E)11.8
Beta (1Y)1.10
Revenue Growth6.45%
EPS Growth2.60%
CountryCA
Employees14,922
SectorIndustrials
Sector Strength66
IndustryIndustrial Equipment Distributors
Share Statistics
EPS (TTM)3.64
Shares Outstanding135,508,820
10 Day Avg. Volume543,287
30 Day Avg. Volume592,441
Financial Highlights & Ratios
PEG Ratio4.52
Price to Book (P/B)N/A
Price to Sales (P/S)0.51
Price to Cash Flow (P/CF)3.50
P/FCF Ratio58.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$50.17Price Target Upside22.01% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Finning International Business Overview & Revenue Model
Company DescriptionFinning International Inc. is the world's largest dealer of Caterpillar products and services. The company operates in sectors including construction, forestry, mining, and power systems, providing equipment, parts, and service solutions. With operations in Canada, South America, and the United Kingdom, Finning offers a comprehensive range of products such as heavy machinery, engines, and power systems, alongside robust support services including maintenance, repair, and equipment rental.
How the Company Makes MoneyFinning International makes money primarily through the sale and rental of Caterpillar machinery and equipment. The company generates revenue from new and used equipment sales, including construction and mining machinery, engines, and power systems. A significant portion of its income also comes from providing equipment rental services, which offer flexible solutions to customers who need machinery on a temporary basis. Additionally, Finning earns revenue from after-sales services, including parts sales, maintenance, and repair services, which are critical in ensuring customers' equipment operates efficiently and reliably. The company's partnerships with Caterpillar and its extensive network of service facilities contribute significantly to its earnings by enhancing its ability to provide comprehensive solutions and support to its client base across various industries.
Finning International Financial Statement Overview
Summary
Finning International demonstrates a strong financial position with robust revenue growth and effective cash flow management. While the balance sheet is stable, attention to rising liabilities and maintaining cost efficiencies will be crucial for sustaining profitability.Income Statement
Finning International shows strong revenue growth with a consistent increase over the past several years, indicating robust market demand. The gross profit margin remains stable, reflecting efficient cost management. However, the company experienced a slight decline in net profit margin over the past year, suggesting potential cost pressures or pricing issues.85
Very Positive
Balance Sheet
The balance sheet is relatively strong, with a moderate debt-to-equity ratio indicating manageable leverage. The equity ratio has remained stable, demonstrating a solid financial base. However, the increase in total liabilities over time suggests a potential risk if not controlled.78
Positive
Cash Flow
Operating cash flow has improved significantly, showcasing strong cash generation capabilities. The free cash flow growth rate is impressive, supporting potential reinvestment opportunities. However, fluctuations in free cash flow in previous years highlight the need for consistent cash management.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 11.21B | 10.53B | 9.28B | 7.29B | 6.20B | Gross Profit |
| 2.48B | 2.58B | 2.22B | 1.80B | 1.57B | EBIT |
| 0.00 | 934.00M | 755.00M | 533.00M | 436.00M | EBITDA |
| 1.21B | 1.28B | 1.09B | 869.00M | 698.00M | Net Income Common Stockholders |
| 509.00M | 523.00M | 503.00M | 364.00M | 232.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 384.00M | 177.00M | 354.00M | 502.00M | 539.00M | Total Assets |
| 7.73B | 7.56B | 7.27B | 5.97B | 5.46B | Total Debt |
| 2.58B | 2.70B | 2.33B | 1.81B | 1.70B | Net Debt |
| 2.26B | 2.54B | 2.04B | 1.31B | 1.16B | Total Liabilities |
| 5.09B | 5.03B | 4.81B | 3.63B | 3.25B | Stockholders Equity |
| 2.63B | 2.51B | 2.44B | 2.32B | 2.21B |
| Cash Flow | Free Cash Flow | |||
| 858.00M | 8.00M | -170.00M | 292.00M | 847.00M | Operating Cash Flow |
| 1.01B | 228.00M | 1.00M | 425.00M | 962.00M | Investing Cash Flow |
| -128.00M | -229.00M | -268.00M | -151.00M | -99.00M | Financing Cash Flow |
| -818.00M | -71.00M | -13.00M | -300.00M | -573.00M |
Finning International Technical Analysis
Positive
41.12
Price Trends
39.49
Positive
39.58
Positive
39.59
Positive
Market Momentum
0.80
Positive
47.45
Neutral
18.71
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FTT, the sentiment is Positive. The current price of 41.12 is below the 20-day moving average (MA) of 42.65, above the 50-day MA of 39.49, and above the 200-day MA of 39.59, indicating a neutral trend. The MACD of 0.80 indicates Positive momentum. The RSI at 47.45 is Neutral, neither overbought nor oversold. The STOCH value of 18.71 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:FTT.
Finning International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | C$5.79B | 11.78 | 19.36% | 2.63% | 6.45% | 2.60% | |
80 Outperform | C$32.22B | 45.69 | 8.24% | 0.58% | 11.98% | 22.53% | |
76 Outperform | C$9.88B | 19.67 | 17.14% | 1.59% | 8.28% | -3.92% | |
73 Outperform | C$1.29B | 27.88 | 7.98% | 3.01% | 3.49% | 9.85% | |
71 Outperform | $2.28B | 14.58 | 9.71% | 4.30% | -5.41% | -37.08% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
59 Neutral | C$1.38B | ― | -3.46% | ― | 20.56% | 94.32% |
* Industrials Sector Average
Performance Comparison
TSE:FTT
Finning International
41.12
6.52
18.84%
TSE:RUS
Russel Metals
39.87
-1.06
-2.58%
TSE:TIH
Toromont Industries
117.93
-3.74
-3.07%
TSE:SIS
Savaria
17.15
0.93
5.73%
TSE:NFI
NFI Group Inc
11.16
-0.15
-1.33%
TSE:WSP
WSP Global
246.90
26.37
11.96%
Finning International Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 13.22% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
Finning International demonstrated robust growth and strategic execution in 2024, achieving record revenues and strong performance in South America and the Power Systems segment. However, challenges remain in the Canadian market and the rental business, with softness in construction affecting earnings. The sentiment is overall positive due to the significant achievements and growth in key areas.Highlights
Record Net Revenue Growth
Finning International achieved a milestone by growing net revenues by 6% over 2023, reaching $10.1 billion, with product support revenue hitting a record high of $5.5 billion.
Strong Equipment Sales
Strong new equipment sales grew over 10%, and used equipment sales increased by nearly 30%. The backlog also grew by over $550 million.
Improvements in South America
South America saw an 8% year-over-year increase in product support revenue in Q4 2024, excluding currency impacts, with nearly 350 net new technicians added during the year.
SG&A Cost Management
SG&A as a percentage of net revenue was reduced to 16.3%, a new low level, demonstrating continued focus on cost management.
Free Cash Flow and Earnings
Delivered significant free cash flow of $865 million and $3.80 of adjusted earnings per share.
Power Systems Growth
Power Systems revenues were up 14% year-over-year, with a 70% increase in the backlog to approximately $860 million.
Lowlights
Canadian Market Challenges
Lower earnings in the Canadian business, with EBIT down 17% from Q4 2023 due to slower activity in construction and a higher proportion of lower-margin mining equipment deliveries.
Rental Revenue Decline
Rental revenue was down 14% from reduced fleet size and lower utilization levels, driven by softer construction activity in Canada.
UK and Ireland Market Softness
Continued soft market conditions and activity levels in the UK and Ireland, with expectations for demand for new construction equipment to remain soft.
Company Guidance
During Finning International Inc.'s Fourth Quarter 2024 Investor Call, substantial guidance was provided. The company achieved a 6% growth in net revenues, reaching $10.1 billion, with product support revenue hitting a record $5.5 billion. New equipment sales grew by over 10%, while used equipment sales surged nearly 30%. The backlog increased by over $550 million, indicating strong market diversity. Product support revenues in Q4 2024 saw a 6% rise from the previous year, with South America contributing an 8% increase, excluding currency impacts. The company added nearly 350 net new technicians, primarily in South America. SG&A as a percentage of net revenue dropped to 16.3%, and free cash flow for the year was $865 million. Earnings per share adjusted to $3.80, with Q4 2024 adjusted EPS reaching $1.02, reflecting a 7% increase from Q4 2023. Finning International continues to focus on strategic priorities, including sustainable growth in used equipment and power systems, with a notable 70% increase in the Power Systems backlog. The company plans to retain a strong focus on managing working capital and cost efficiencies across regions, aiming to maximize product support and enhance the U.S. rental and power businesses in 2025.Finning International Corporate Events
Business Operations and StrategyFinancial Disclosures
Finning International Achieves Record Revenue in 2024
Positive
Feb 4, 2025
Finning International reported record net revenue of $10.1 billion for 2024, driven by significant growth in new equipment and product support revenue. The company experienced strong performance in South America and the UK and Ireland, despite challenges in Canada. This achievement, along with record Q4 earnings per share and substantial free cash flow, underscores Finning’s strategic focus on geographic and market diversity, which is expected to continue as a key factor in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.