Element Fleet Mnagement runs a steady race

          An earlier blog on Workathon discussed the competition between Element Fleet Management and DH Corp.Both are in the financial industry and both have specialty niches;they are not banks.A later blog talked about at this time DH Corp appears to have won the race.Its' earnings per share are bigger but it's assets are smaller.But EFN has done very well.In fact, DH just reduced it's dividend while EFN raised its.
       Highlights of 2016
   Element Fleet Management has had an eventful year.Most importantly it separated into two companies-ECN Capital and Element Fleet Management.And Element Fleet informs it's shareholders that it has made 4 major acquisitions since 2012 and  makes considerable income.Before tax income was $428 million but only $385 million was attributable to common shareholders.In order to make these acquisitions it has issued a lot of equity and has considerable earnings but e.p.s is only $1.00 compared to DH's $1.52 per share.EFN however has increased it's e.p.s from $.69 per share in 2015 for a 40% gain.
       The Split-up
     On October3, 2016 Element Financial split into companies;it had been discussed for some time and finally did split into Element Fleet Management and ECN Capital.The original price was about $13 a share and it trades at almost that now.EFN has taken large restructuring charges  in the last two quarters($238 and $203million) in order to complete the break-up.Steve Hudson, their CEO, says that EFN "has taken heavy integration and separation costs and intends to improve their performance indicators in 2017".
       Summary
   DH has been heading the wrong way and will likely divest assets in order to reduce it's debt.On the other hand,EFN has taken on a lot of debt also and has made 4 major acquisitions.So firstly EFN has considerably more assets,especially tangible assets,but it's return on assets is larger.In a case like this adjusted EBITDA is not the best measure of performance.EBT must be used and I (interest payments) must be deducted.Using EBT to calculate e.p.s. DH comes out a little better with EFN growing faster.That is why this blog thinks EFN is heading towards $14 to $17 per share  and DH is probably staying in a tight range around  it's present price.   

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