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  5. EFN: I have had EFN on a buy watchlist but always hesitated because CFRA, a firm whose analyses I have found useful and reliable, gave EFN a poor rating. [Element Fleet Management Corp.]
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Investment Q&A

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Q: I have had EFN on a buy watchlist but always hesitated because CFRA, a firm whose analyses I have found useful and reliable, gave EFN a poor rating. Last week RBC’s Toronto office initiated coverage and rated EFN its ‘top growth stock’. Please give your own analysis and comments on EFN, including possible vulnerability to tariff flip-flops; soundness of business model; competitive position; and strength of management. Share value has risen rapidly and EFN is at 52-week highs. I am tempted to wait for a better price, but good companies have a habit of 'running away' from one.
Asked by Adam on July 01, 2025
5i Research Answer:

Keep in mind that every single trade has an equal and opposing viewpoint. EFN is up 18% YTD, 39% over one year, and trades at 21X earnings, with a 1.72% yield. The dividend was last raised in November 2024. Following some early hiccups and accounting issues in the early days of its existence (post split up of the company), EFN has put things together again and has shown consistent and stable growth since 2019. Revenue is up about 80% in that time, and EPS has gone from 21c to an expected $1.21 this year. The majority of its business is in the US, which helps the tariff situation. We would not expect a huge direct impact, but the cost of its vehicles may certainly increase, which could slow growth and/or hurt margins. Lower interest rates, if they occur, would help things overall. We think management is good as is its competitive positioning. Shares are up 235% in the past five years. The share count has risen, however, in the past 10 years, but has declined in the past five. We would be comfortable buying this today for a long term hold.