What Peak Auto?? – Record Revenue and EPS…Easily has to be one of the better small cap allocators of capital in Canada. The ability for them to put their cash to use for the AFX acquisition is looking real good right now.
On the numbers front Revenue Growth of 33% and EPS growth of 65%. Impressive both on the top and bottom line and to think you get all that for 8.8x P/E. Great Q all around.
This peak auto thesis and impending doom of the auto cycle is getting ridiculous. Exco Tech just put up a monster number in their Automotive Solutions division of 115.1M (prior 75.6M) for a growth rate of 52%. Add the synergies and additional contract wins that will be driven out of the AFX acquisition and you got a run rate for growth out 12 -18 months.
Quietly they have grown their ROE and will now have a ROE over 20%. You will never go wrong buying companies that can compound their capital this effectively.
Continued execution, sound market conditions and maybe finally an abatement of the end of the world sentiment in the auto sector are looking to all begin to turn in Exco’s favour. This stock could quickly rip up 20% just to get it back to the 15 SP level and still be real cheap given how good the Q looked.
LONG LONG LONG