TSX:CERV

Stock Analysis Report

Executive Summary

Cervus Equipment Corporation engages in the sale, after-sale service, and maintenance of agricultural, transportation, and industrial equipment.

Rewards

Earnings are forecast to grow 111.43% per year

Risk Analysis

Interest payments are not well covered by earnings

Dividend of 5.06% is not well covered by earnings

Large one-off items impacting financial results

Profit margins (0.4%) are lower than last year (1.8%)



Snowflake Analysis

Moderate growth potential with mediocre balance sheet.


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Share Price & News

How has Cervus Equipment's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CERV has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.7%

CERV

-2.3%

CA Trade Distributors

0.6%

CA Market


1 Year Return

-32.2%

CERV

-1.4%

CA Trade Distributors

5.8%

CA Market

Return vs Industry: CERV underperformed the Canadian Trade Distributors industry which returned -1.4% over the past year.

Return vs Market: CERV underperformed the Canadian Market which returned 5.8% over the past year.


Shareholder returns

CERVIndustryMarket
7 Day-0.7%-2.3%0.6%
30 Day1.1%-4.5%0.5%
90 Day13.7%-1.6%3.6%
1 Year-29.2%-32.2%1.7%-1.4%9.1%5.8%
3 Year-33.4%-39.5%14.7%5.1%15.4%5.0%
5 Year-45.1%-53.9%45.7%24.0%33.6%14.0%

Price Volatility Vs. Market

How volatile is Cervus Equipment's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cervus Equipment undervalued compared to its fair value and its price relative to the market?

25.49x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CERV (CA$8.7) is trading above our estimate of fair value (CA$5.56)

Significantly Below Fair Value: CERV is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: CERV is poor value based on its PE Ratio (25.5x) compared to the Trade Distributors industry average (14.9x).

PE vs Market: CERV is poor value based on its PE Ratio (25.5x) compared to the Canadian market (15.9x).


Price to Earnings Growth Ratio

PEG Ratio: CERV is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: CERV is good value based on its PB Ratio (0.6x) compared to the CA Trade Distributors industry average (1.1x).


Next Steps

Future Growth

How is Cervus Equipment forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

111.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CERV's forecast earnings growth (111.4% per year) is above the savings rate (1.4%).

Earnings vs Market: CERV's earnings (111.4% per year) are forecast to grow faster than the Canadian market (10.4% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: CERV's revenue (1.3% per year) is forecast to grow slower than the Canadian market (4.9% per year).

High Growth Revenue: CERV's revenue (1.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CERV's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Cervus Equipment performed over the past 5 years?

25.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CERV has a large one-off gain of CA$2.3M impacting its September 30 2019 financial results.

Growing Profit Margin: CERV's current net profit margins (0.4%) are lower than last year (1.8%).


Past Earnings Growth Analysis

Earnings Trend: CERV's earnings have grown significantly by 25.4% per year over the past 5 years.

Accelerating Growth: CERV's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CERV had negative earnings growth (-77.6%) over the past year, making it difficult to compare to the Trade Distributors industry average (-2.7%).


Return on Equity

High ROE: CERV's Return on Equity (2.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cervus Equipment's financial position?


Financial Position Analysis

Short Term Liabilities: CERV's short term assets (CA$450.2M) exceed its short term liabilities (CA$309.7M).

Long Term Liabilities: CERV's short term assets (CA$450.2M) exceed its long term liabilities (CA$122.7M).


Debt to Equity History and Analysis

Debt Level: CERV's debt to equity ratio (109.4%) is considered high.

Reducing Debt: CERV's debt to equity ratio has reduced from 125.1% to 109.4% over the past 5 years.

Debt Coverage: CERV's debt is not well covered by operating cash flow (18.3%).

Interest Coverage: CERV's interest payments on its debt are not well covered by EBIT (1.6x coverage).


Balance Sheet

Inventory Level: CERV has a high level of physical assets or inventory.

Debt Coverage by Assets: CERV's debt is covered by short term assets (assets are 1.8x debt).


Next Steps

Dividend

What is Cervus Equipment's current dividend yield, its reliability and sustainability?

5.06%

Current Dividend Yield


Dividend Yield vs Market

company5.1%marketbottom25%1.9%markettop25%5.3%industryaverage3.2%forecastin3Years5.1%

Current dividend yield vs market & industry

Notable Dividend: CERV's dividend (5.06%) is higher than the bottom 25% of dividend payers in the Canadian market (1.91%).

High Dividend: CERV's dividend (5.06%) is low compared to the top 25% of dividend payers in the Canadian market (5.32%).


Stability and Growth of Payments

Stable Dividend: CERV's dividend payments have been volatile in the past 10 years.

Growing Dividend: CERV's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (126%), CERV's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CERV's dividends in 3 years are forecast to be covered by earnings (59.1% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure


CEO

Angela Lekatsas (57yo)

0.8yrs

Tenure

CA$77,891

Compensation

Ms. Angela S. Lekatsas, B. Comm., CA, CPA (Illinois) has been a Vice President and Treasurer of Agrium Inc. since 2011. Ms. Lekatsas serves as a President and Chief Executive Officer at Cervus Equipment Co ...


Leadership Team

NamePositionTenureCompensationOwnership
Angela Lekatsas
President0.8yrsCA$77.89k0.15% CA$198.2k
Adam Lowther
Chief Financial Officer2.1yrsCA$475.71k0.017% CA$22.8k
Fred Hnatiw
Vice President of Operations5.6yrsCA$575.69k0.069% CA$92.7k
Stella Cosby
Vice President of People5.6yrsCA$486.23k0.028% CA$37.5k
Calvin Johnson
Vice President of Operations - Agriculture Canada7.8yrsCA$564.81k1.14% CA$1.5m
Devin Mylrea
Corporate Counsel & Corporate Secretary1.8yrsno datano data
Mark Bradley
Managing Director0yrsCA$238.68kno data
Scott Johnston
Vice President of Agriculture Canada0yrsno data0.0057% CA$7.6k

3.8yrs

Average Tenure

54.5yo

Average Age

Experienced Management: CERV's management team is considered experienced (3.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Angela Lekatsas
President0.8yrsCA$77.89k0.15% CA$198.2k
Peter Lacey
Independent Chairman of the Board7.8yrsCA$177.20k18.1% CA$24.2m
Steven Collicutt
Independent Director17.1yrsCA$74.93k0.25% CA$329.3k
Daniel Sobic
Independent Director2.4yrsCA$68.00k0.042% CA$55.6k
Larry Benke
Independent Director7.8yrsCA$75.10k0.046% CA$60.9k
Donald Bell
Lead Director0yrsCA$82.57k0.51% CA$680.3k
Wendy Henkelman
Independent Director0.4yrsno datano data

7.5yrs

Average Tenure

63yo

Average Age

Experienced Board: CERV's board of directors are considered experienced (7.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CERV insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Cervus Equipment Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Cervus Equipment Corporation
  • Ticker: CERV
  • Exchange: TSX
  • Founded: 2003
  • Industry: Trading Companies and Distributors
  • Sector: Capital Goods
  • Market Cap: CA$133.471m
  • Shares outstanding: 15.35m
  • Website: https://www.cervusequipment.com

Number of Employees


Location

  • Cervus Equipment Corporation
  • Harvest Hills Business Park
  • 5201 – 333 96 Avenue NE
  • Calgary
  • Alberta
  • T3K 0S3
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CERVTSX (The Toronto Stock Exchange)YesCommon StockCACADMay 2003
VCEDB (Deutsche Boerse AG)YesCommon StockDEEURMay 2003
CSQP.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDMay 2003

Biography

Cervus Equipment Corporation engages in the sale, after-sale service, and maintenance of agricultural, transportation, and industrial equipment. It operates through three segments: Agricultural, Transportation, and Industrial Equipment. The Agricultural segment offers tractors, combine harvesting equipment, tillage, seeding, nutrient management and soil preparation machinery, sprayers, hay and forage equipment, material handling, integrated agricultural systems technology, precision agricultural irrigation equipment and supplies, lawn and garden tractors, compact utility tractors, zero-turn radius and front mowers, and utility vehicles; and associated implements for mowing, tilling, snow and debris handling, aerating, and other turf applications. As of December 31, 2018, this segment consisted of interests in 36 John Deere dealership locations with 15 in Alberta, 5 in Saskatchewan, 1 in British Columbia, 9 in New Zealand, and 6 in Australia. The Transportation segment sells and services road conventional, vocational, and medium-duty pick-up and delivery trucks. This segment had 19 dealerships with 4 Peterbilt truck dealerships and 1 collision repair center operating in Saskatchewan, and 12 full service Peterbilt truck dealerships and 2 parts and service centers operating in Ontario. The Industrial Equipment segment sells cushion tire forklifts, electric forklifts, multi directional forklifts, narrow aisle forklifts, pneumatic tire forklifts, power stackers, rough terrain forklifts, heavy forklifts, sweepers and scrubbers, telescopic handlers, aerial work platforms, side loaders, and drop deck trailers from brands, such as Sellick, Clark, Doosan, JLG, and Baumann; and provides storage and racking equipment for warehousing, operator training, and preventative maintenance. This segment had 8 dealership locations with 5 operating in Alberta, 2 operating in Saskatchewan, and 1 operating in Manitoba. The company was founded in 2003 and is headquartered in Calgary, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:22
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.