Improved sales of equipment and services on three continents led to this company’s 15.4% revenue jump in the most-recent quarter.
Its latest dividend hike in June 2019 further adds to its appeal and supports its high 3.5% yield.
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FINNING INTERNATIONAL INC. (Toronto symbol FTT; www.finning.com) sells and services Caterpillar-brand heavy equipment in Western Canada, South America and the U.K. Its main customers are in the oil, mining, forestry-products and construction industries.
Finning recently paid $260 million for 4Refuel. That firm operates a fleet of 200 tanker trucks that provide on-site re-fuelling services to companies in the construction, transportation, oil and gas, and power generation industries.
Starting with the June 2019 payment, Finning raised its quarterly dividend by 2.5%. Investors receive $0.205 a share, up from $0.20. The annual rate of $0.82 yields 3.5% and the company’s dividend has grown an average of 2.9% annually over the last 5 years.
In the three months ended June 30, 2019, Finning’s revenue rose 15.4%, to $2.00 billion from $1.73 billion a year earlier. That beat the consensus forecast of $1.8 billion.
Specifically, revenue for the company’s Canadian operations (55% of the total) rose 18.4% thanks to strong demand for mining and construction equipment. The U.K. operations (15%) saw 8.9% higher revenue on stronger sales of new equipment to electric power projects. Its South American unit had a 13.6% increase in revenue (31%) on stronger new equipment sales to the mining industry in Chile.
Earnings in the quarter, excluding one-time items, rose 9.2%, to $88.1 million, or $0.54 a share. A year earlier, Finning earned $80.7 million, or $0.48. That also beat the consensus estimate of $0.42.
The gain reflects strong profitability for the Canadian business. On a per-share basis, earnings increased 12.5% due to fewer shares outstanding.
The company’s shares trade at 10.9 times the 2019 earnings forecast of $2.12.
Recommendation in Dividend Advisor: Finning International is a buy.
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