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On Thursday, BMO Capital Markets adjusted its outlook on Finning International Inc . (TSX:FTT:CN) (OTC: FINGF), increasing the company’s price target from Cdn$52.00 to Cdn$57.00. The firm maintained its Outperform rating on the stock, signaling confidence in the company’s potential for growth. According to InvestingPro data, the stock has delivered an impressive 41.2% return year-to-date, reflecting strong market confidence.
The upgrade comes amid a period of economic uncertainty where Finning International has been effectively leveraging opportunities to maintain robust earnings. The company has achieved a strong Return on Invested Capital (ROIC) of 11% and boasts an impressive free cash flow yield of 18%. InvestingPro analysis indicates management has been aggressively buying back shares, demonstrating confidence in the company’s future.
BMO Capital’s analyst noted that if Finning continues to perform in line with the expectations set during its 2023 Investor Day, there could be further upside to both earnings and valuation. This optimism is reflected in the revised price target, which is now set at 12 times the forward earnings per share estimate, up from the previous 11 times. The company currently trades at a P/E ratio of 14.18x and maintains an overall financial health score of "GREAT" according to InvestingPro’s comprehensive analysis, which offers 12 additional valuable insights for subscribers.
Finning International, recognized within BMO Capital’s coverage as a top pick among equipment dealers, is expected to benefit from a valuation re-rating as it builds on its financial performance. The analyst emphasized the company’s success in capitalizing on available opportunities despite the challenging economic climate.
The new price target of Cdn$57.00 underscores BMO Capital’s belief in Finning International’s growth trajectory and its ability to outperform within the sector. The company’s strategic actions, including share repurchases and sustained earnings, are key factors contributing to this positive outlook.
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