Increased congestion on roads worldwide is good news for International Road Dynamics (International Road Dynamics Stock Quote, Chart, News: TSX:IRD), says Cantor Fitzgerald Canada analyst David Tomljenovic.
In a research report to clients this morning, Tomljenovic initiated coverage of International Road Dynamics with a “Buy” rating and a one-year price target of $2.50, implying a return of 85 per cent at the time of publication.
Saskatoon-based International Road Dynamics plays in the Intelligent Transportation Systems (“ITS”) space. The company is focused on improving the efficiency, safety, mobility and cleanliness of highway and roadway transportation.
Tomljenovic cites a recent study, Texas A&M Transportation Institute’s 2015 Urban Mobility Information Report, that says traffic congestion cost the U.S. economy $160-billion in 2015 alone. He says IRD’s solutions, which include OEM technologies that detect, track, classify and weigh vehicles at highway speeds, traffic counters and classifiers, are increasingly in demand.
“International Road Dynamics provides unique exposure to a significant global issue, traffic congestion, increasing wear on aging and overburdened highway infrastructure, and overall safety,” says Tomljenovic. “The number of drivers and vehicles and the amount of global road-born freight are growing exponentially while additions to the global highway infrastructure have hardly changed. This is a highly unsustainable equation that has a very real cost to the global economy.”
Tomljenovic thinks IRD’s revenue will grow from $57.9-million in 2015 to $65.6-million the following year, and then to $72.2-million in fiscal 2017. He thinks the company’s bottom line will rise on the back of steadily improving EBITDA margins, which he says should top 10 per cent by 2021.