MiX Telematics Ltd Connects Vehicle Fleets & Mobile Assets The reopening of the global economy will drive up the demand for transportation and delivery... MiX Telematics Ltd: Cheap Technology Play for the Global Transportation Recovery

MiX Telematics Ltd Connects Vehicle Fleets & Mobile Assets

The reopening of the global economy will drive up the demand for transportation and delivery services, namely car and truck fleet and mobile asset management solutions.

It’s estimated that the fleet management market will grow at a compound annual growth rate (CAGR) of more than 15% from 2021 to 2027. The fleet management market was worth about $16.0 billion in 2020. (Source: “Fleet Management Market Size by Solution,” Global Market Insights Inc., last accessed January 25, 2022.)

To play this market growth, consider MiX Telematics Ltd (NYSE:MIXT), a provider of fleet and mobile asset management solutions to clients in more than 120 countries.

The company serves enterprise fleets, small fleets, and consumers. Its biggest market is Africa, followed by the Middle East and Australasia, the Americas, Europe, and Brazil. (Source: “Investor Presentation: August 2021” MiX Telematics Ltd, last accessed January 25, 2022.)

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MIXT Stock Trading at Major Inflection Point

The below chart shows MiX Telematics stock hovering below both its 50-day and 200-day moving averages and searching for direction.

In September 2021, MIXT stock moved into a death cross pattern, a bearish crossover that appears when the 50-day moving average breaks below the 200-day moving average. This generally suggests weakness.

While MiX Telematics stock is down by 32% from its 52-week high of $16.79, its recent failure to hold major support at $12.00 is a concern, since there’s minimal support until about $10.50.

Investors might want to enter with small tranches to test the support. The immediate upside target for MIXT stock is the 200-day moving average at $13.05, followed by $14.00–$16.00.

Chart courtesy of StockCharts.com

Rising Business Activity Could Power Demand for MiX Telematics Ltd

A look at MiX Telematics Ltd’s five-year revenue picture shows the company slowly growing its revenues from fiscal 2018 to 2020 (ending in March), prior to making a contraction due to the COVID-19 pandemic in 2021.

But there’s hope, as the company’s revenues have rallied to $139.4 million in the 12 months up to September 2021.

Analysts estimate that MiX Telematics Ltd will report revenue growth of 12.5% to $142.8 million in 2022 and 8.2% to $154.5 million in 2023. (Source: “MiX Telematics Limited (MIXT),” Yahoo! Finance, last accessed January 25, 2022.)

Fiscal Year Revenue (Billions) Growth
2017 $1.17 N/A
2018 $1.23 5.1%
2019 $1.17 -4.9%
2020 $1.23 5.1%
2021 $1.40 13.8%

(Source: “MiX Telematics Ltd. ADR,” MarketWatch, last accessed January 25, 2022.)

MiX Telematics has managed to deliver earnings before interest, taxes, depreciation, and amortization (EBITDA) income in five consecutive years, including growth from 2018 to 2020 before the impact of the pandemic.

Fiscal Year EBITDA (Millions) Growth
2017 $22.3 N/A
2018 $31.7 42.2%
2019 $40.9 29.0%
2020 $43.0 5.1%
2021 $35.8 -16.7%

(Source: MarketWatch, op. cit.)

At the bottom line, MiX Telematics Ltd is profitable based on generally accepted accounting principles (GAAP) diluted earnings per share (EPS).

Adjusting for non-recurring expenses, the company earned $0.65 per diluted share in 2021. This is expected to drop to $0.45 in 2022 but rebound to $0.56 in 2023. (SourceYahoo! Finance, op. cit.)

Over the last five quarters (up to the second fiscal quarter), MiX Telematics easily beat the consensus EPS estimates in four of the five quarters.

Fiscal Year GAAP Diluted EPS Growth
2017 $0.01 N/A
2018 $0.02 100.0%
2019 $0.03 50.0%
2020 $0.02 -33.3%
2021 $0.03 50.0%

(Source: MarketWatch, op. cit.)

Moreover, MiX Telematics Ltd has been a free cash flow machine, delivering a 151% jump to $33.9 million in 2021.

Fiscal Year Free Cash Flow (Millions) Growth
2017 $10.7 N/A
2018 $7.7 -28.0%
2019 $16.8 118.2%
2020 $13.5 -19.6%
2021 $33.9 151.1%

(Source: MarketWatch, op. cit.)

Analyst Take

MiX Telematics stock is a play on the global renewal in commerce as the demand for transportation and delivery services accelerates.

A look at the valuation shows MiX Telematics Ltd trading at a reasonable 1.8 times its consensus 2023 revenue estimate. Considering the relative valuation of the Nasdaq, this is attractive.

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