FINNING INTERNATIONAL INC. $18 - Toronto symbol FTT

FINNING INTERNATIONAL INC. $18 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 169.3 million; Market cap: $3.0 billion; Price-to-sales ratio: 0.5; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.finning.com) sells and services Caterpillar-brand heavy equipment. Its main customers are in the oil, mining, forest-products and construction industries. Weaker commodity prices continue to hurt equipment demand. In response, Finning has laid off 13% of its workforce and closed 11 of its locations in Western Canada. The company is now looking at other ways to lower its costs, such as shipping parts directly to customers instead of through dealerships. Meanwhile, Finning’s earnings fell 42.4% in the three months ended September 30, 2015, to $0.19 a share from $0.33 a year earlier. Without one-time items, the company earned $0.34 a share in the latest quarter. Overall revenue declined 10.3%, to $1.5 billion from $1.7 billion. Sales of new equipment fell 30.4%, while rental-equipment revenue fell 8.6%. These declines more than offset a 20.6% increase in used-equipment sales and 3.2% higher product-support revenue. Finning is still a buy for long-term gains.

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