Q: Could you please give me your opinion on this stock for a two year hold in a TFSA.
Thank you
Thank you
5i Research Answer:
The outlook for the next two years looks good with solid growth forecasted for both revenue and EPS. Current valuation of 16.2x forward-earnings is decent considering the stock's good momentum (up 25.5% in the last year) and an OK yield of 2.1%. EFN looks to be growing nicely and operates with solid margins. The balance sheet is quite levered with a $10.4B debt position and 2.7x debt-to-equity ratio. This would be our main concern, and debt has caused some issues in the past. Cash from operations has been quite negative over the last four quarters. We think EFN is a decent option for a TFSA at the current valuation but we do want to monitor the high debt load.