top of page
Search

Fleetcor: Quality compounder at a discount due to short term factors

  • Writer: Abacus Research
    Abacus Research
  • Feb 4, 2019
  • 1 min read

Fleetcor is an attractive, capital light, high return, fully scaled and sticky SMB B2B payments company. We think it is a compounder with solid underlying organic growth at ~8%, and a few options for organic growth upside, however we are attracted to FLT’s capital allocation opportunity on a lower leverage balance sheet and almost $1bn in FCF. 

  • Capital light model, means $1bn + per year available for acquisitions versus only ~$100m in last 12-months. We expect acquisitions to pick-up over the next 12-months.

  • FLT's PE has contracted significantly due to oil price declines which will cause slower growth in 2019. Lower oil prices and mis-execution over the last two years gives the opportunity for longer term investors. 

Potential Upside: $273(+35%) over 2 years, with additional upside potential from M&A.

Sensible Downside: $179(-11%) based on low organic growth scenario. In our downside we estimate 3.7% sales growth in 2019, vs street at 7%.


 
 
 

Recent Posts

See All
SEDG, ENPH, NVTS: Plays on 800V

Everybody knows about the 800V conversion that is coming. NVDA etc have released the specs. There are many parts to that ecosystem change. Most of them are not ‘free options’ whereas SEDG and ENPH mos

 
 
 
Axon:

Axon is shifting from selling individual tools to providing an interconnected ecosystem. Hardware like TASERs and cameras now act as "data generators" that feed directly into high-margin software modu

 
 
 
C.H. Robinson

CHRW has been going through significant change, They are retaking market share. The new CEO has transformed the company by bringing in a lean / AI, that has helped CHRW to grow earnings despite strugg

 
 
 

Comments

bottom of page