Finning International Inc. shares are down almost 3% Wednesday, after the company released disappointing fourth quarter earnings.
Benoit Poirier, analyst, Desjardins Securities, maintained his Buy rating and $19 price target, but told clients he was underwhelmed by the company's margin weakness in the quarter, particularly in Canada where EBIT margins came in at 1.8% compared to his estimate of 5.1%. This despite the fact Finning's revenues on this side of the border beat his expectations.
The analyst also expressed concerns over Finning's troubled U.K.-based rental subsidiary Hewden. The company is still considering whether to sell the division and will announce its decision by the end of the
second quarter.
"The future of Hewden is still unresolved and two options remain on the table. One is to keep Hewden and restructure its operations. The second (our preferred option) would be to divest of Hewden," Mr. Poirier said.