- FLEETCOR is a high quality business expense automation company, with 42% of revenue from gas cards and 20% from their accounts payable business.
- Both directly benefit from higher inflation and gasoline prices. Even a transition to electric vehicles likely is a net benefit to the company.
- FLEETCOR appears likely to beat EPS guidance again this year, and remarkably trades at a near record low valuation at only 16x 2022 earnings.
- Given their 15-20% EPS growth forecasts, we peg a fair value of FLT at 17-19x 2023 earnings, which puts the stock up 30-70% in a year or three.
- Downside appears ~10-15% given the huge margin of safety on the stock currently. There is recession risk, but that appears partly priced in as well.
For further details see:
FLEETCOR Technologies: Near Record Low Valuation For This Compounder That Benefits From Higher Inflation