I was wondering if any of you guys follow this stock. I have taken a small position in this one recently after selling some stocks which I felt were worth taking profits on. This is a company that makes heavy duty transit buses and also has business divisions that focus on after market parts and repairs/maintenance. They are just coming off a couple of small acquisitions that should be quite accretive with their existing operations. They currently have a market cap of about $513M, PE 9.9, Div yield 5.6%. They are a dominant player in CNG buses and now have a better total package to offer municipalities after their acquisitions. They have just announced a few big deals and have a big backlog (about $2.7B at their last update a couple of months ago or about 5 times their current market cap with 2/3rds of that firm and 1/3rd options).
In terms of recent major business deals a dominant Brazilian bus company Marcopolo SA has bought a 19.9% interest in the company for $116M that will be invested in NFI's production capabilities. This deal should open up the Brazilian market for them and their CNG buses. They also recently made an acquisition of Daimler's North American bus aftermarket parts division that rounds out their portfolio of services and decrease the cyclicality of their business.
They are presently the leader in CNG buses (powertrain from Cummins). With municipalities trying to produce cleaner air choices and decrease operating expenses that can give them an advantage. They do offer other powertrains including diesel, LNG, electric and diesel-electric hybrids but CNG appears to be their strength. Many municipalities are stuck with ageing, fuel inefficient and heavily polluting fleets that lack modern features such as security cameras and wheelchair accessibility while trying to deal with increased ridership. This should give them a long runway of steady demand for several years.
On the negative side of the ledger it seems as though much of their orders come from municipalities who may be struggling under debt burden. If the federal and state governments now come under further stress from sequestration that could affect future orders and even some of their current backlog. The other thing about them is their earnings tend to be a bit lumpy from quarter to quarter so that could lead to a fair bit of volatility.
Anyhow, this company looks like they are strong right now and are in a very favorable industry for the next decade or so. They are very shareholder friendly with what looks like a sustainable dividend. Their appears to be quite a bit of room for growth with their big backlog. Management also seems to understand how to deploy capital with their decision to leave manufacturing of less profitable bus lines to competitors and their focus on higher end CNG alternatives.
Any thoughts on this one are appreciated.
In terms of recent major business deals a dominant Brazilian bus company Marcopolo SA has bought a 19.9% interest in the company for $116M that will be invested in NFI's production capabilities. This deal should open up the Brazilian market for them and their CNG buses. They also recently made an acquisition of Daimler's North American bus aftermarket parts division that rounds out their portfolio of services and decrease the cyclicality of their business.
They are presently the leader in CNG buses (powertrain from Cummins). With municipalities trying to produce cleaner air choices and decrease operating expenses that can give them an advantage. They do offer other powertrains including diesel, LNG, electric and diesel-electric hybrids but CNG appears to be their strength. Many municipalities are stuck with ageing, fuel inefficient and heavily polluting fleets that lack modern features such as security cameras and wheelchair accessibility while trying to deal with increased ridership. This should give them a long runway of steady demand for several years.
On the negative side of the ledger it seems as though much of their orders come from municipalities who may be struggling under debt burden. If the federal and state governments now come under further stress from sequestration that could affect future orders and even some of their current backlog. The other thing about them is their earnings tend to be a bit lumpy from quarter to quarter so that could lead to a fair bit of volatility.
Anyhow, this company looks like they are strong right now and are in a very favorable industry for the next decade or so. They are very shareholder friendly with what looks like a sustainable dividend. Their appears to be quite a bit of room for growth with their big backlog. Management also seems to understand how to deploy capital with their decision to leave manufacturing of less profitable bus lines to competitors and their focus on higher end CNG alternatives.
Any thoughts on this one are appreciated.