Finning Stock Jumps on Strong Earnings and a 10% Dividend Bump

Finning (TSX:FTT) stock saw shares climb higher on strong first-quarter earnings coupled with a dividend increase of 10%.

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Finning International (TSX:FTT) stock saw shares climb higher on Tuesday as the company reported earnings on the TSX today. The Canadian-based heavy equipment and engine company delivered a strong first quarter that saw shares rise by 4% in early morning trading.

What happened?

Finning stock reported its first quarter results, which helped lead to a rise in share price. The company reported first-quarter revenue of $2.6 billion, with an equipment backlog of $2 billion. In fact, its order intake in South America, the United Kingdom, and Ireland outpaced delivered in the first quarter, driven by mining and power systems.

Furthermore, earnings per share came to $0.84, with free cash flow of $210 million. The company also reported it would be increasing its dividend by 10%. This marked the company’s 23rd consecutive year of dividend growth. 

“We are pleased with our recent strategically important wins in each region, including contracts with multiple copper mines in Chile, the oil sands in Canada, and data centers in the U.K. and Ireland. These wins represent over $700 million of new equipment orders received in April, which bolster our backlog and demonstrate increasing customer confidence in their markets and our partnership.”

Kevin Parkes, president and chief executive officer.

How it compares

A great way to see what else could lead to a share price increase is to look at past earnings reports—not from a year ago but from the last few quarters. This can help demonstrate whether Finning stock is achieving strong momentum.

In this case, the third quarter of 2023 saw revenue hit $2.7 billion, with an equipment backlog of $2.3 billion as well. There were significant mining orders in South America during this period, with lower elsewhere. Earnings per share also hit $1.07, far higher than the first quarter, and $57 million in free cash flow.

By the fourth quarter, earnings slumped downwards. Earnings per share hit $0.59, lower than first quarter results, with revenue at $2.7 billion. Free cash flow rose to $280 million, marking a decrease in the first quarter. Furthermore, the backlog fell to $2 billion, which remained flat during the first quarter.

Now what?

I think the results demonstrate that there are improvements being made, and more strength in the future. What’s more, the company has seen enough improvements to warrant a high dividend. This can certainly help gain more investor confidence.

Furthermore, there continue to be changes at Finning stock that deliver stronger results for the future. This includes more demand in the United Kingdom and Ireland, as well as South America. In particular, this includes the demand for more copper production.

Therefore, Finning stock looks like it may just be starting to see a stronger recovery. Hence the increase, though a low increase at that. There is enough positivity for investors to consider investing once more in Finning stock, especially when they can latch onto a recent dividend increase of 10%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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