Earlier blogs on Workathon talked about an implied competition between Element Financial and DH Corp (see March 6 and April 7,2016)www.blogale-workathon.blogspot.com/.Those blogs predicted that another financial institution might get a share but not all of DH at the right price.It also predicted that e.p.s for Element Fleet Management might hit $1.25 and the shares would be trading at $15 to $17.Some of this has happened and some has not.It's hard to see perfectly into the future.
Why My Forecasts were not Better
Forecasts are always based on certain assumptions so one or two of my assumptions were incorrect.I thought that the forecasts of e.p.s given by Google and Yahoo Finance for DH were low;$.36 per share of earnings seemed low but it must have been high.Customers saw DH as a sinking ship and got off .The price remained at $25 a share but earnings must have dropped off.It's market capitalization was $2.8 billion but it sold(reportedly) for $2 billion.Now it has merged with another financial technology company and new
company is called Finastra.So if there was a race then DH lost it.
This blog predicted e.p.s of $1.25 per share for EFN but it came in at $1.00 per share.Still this was enough to pay their dividend and have positive cash flow.But many investors may have thought that EFN was not paying off it's debt fast enough.Although it's fundamentals are still solid it headed towards $9.00 instead of $15 per share.EFN will need another solid quarter this time to inch it's share price back towards $12.EFN won the race but it is not moving very fast.
Conclusion
Both companies expanded quite rapidly and both took on a lot of debt.DH made a lot of it's new acquisitions in USA.And it is possible that infamiliarity with it's new, sophisticated market may have surprised DH and then helped to close it down.EFN has taken on a lot of debt also but is paring it down.This blog thinks that neither is likely to make any acquisitions soon.So EFN won the race as DH isn't running anymore.It is always important to consolidate new acquisitions with the existing structure before expanding again.
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