It’s frequent information that the TSX is dominated by vitality and monetary corporations – however that dominance comes on the expense of different sectors, particularly industrials. When folks discuss Canadian industrial shares, their minds usually go straight to the 2 main railways or perhaps a garbage-disposal agency or two.
However in case you dig into the mid-cap house, you’ll discover some quiet compounders value a better look. One instance? The unassuming Factor Fleet Administration Corp (TSX:EFN). Right here’s why I imagine it’s an actual hidden gem within the Canadian industrial sector.
What’s EFN?
EFN is a worldwide fleet-management providers firm that handles automobile acquisition, financing, programme administration and remarketing throughout Canada, the U.S., Mexico, Australia and New Zealand. Its mannequin blends service income, financing income and remarketing of used autos, creating a number of income streams.
EFN stands out within the TSX industrial panorama as a result of it doesn’t match the standard mould of “railway or gear distributor.” As a substitute, it operates as a professional-services enterprise in fleet administration – a rarer animal on the Canadian change. It manages greater than 1.5 million autos below administration as of Q3 2025, up 2% year-over-year.
The enterprise is much less uncovered to commodity cycles and extra pushed by recurring contracts and fleet utilization, which provides it a steadier progress profile. Combining this capital-efficient mannequin with international scale places EFN in a class comparatively underpopulated on the TSX – and that’s why I imagine it qualifies as a hidden gem.
Is EFN a great purchase?
In Q3 2025, the corporate reported internet revenues of US$306.4 million, up 10% yr‐over‐yr, and adjusted EPS of US$0.33, up 14%. The corporate additionally generated US $0.42 in adjusted free money circulate per share, up 17% from a yr earlier.
On the steadiness sheet aspect, the corporate carries debt – its enterprise is capital-intensive – but it surely holds strong credit score scores, and a capital-light providers element is rising.
Valuation metrics present the corporate trades at round a 16% earnings progress run-rate and returns on fairness of roughly 15.4%. All in all, for an organization that sounds “boring,” EFN seems to ship high quality enterprise fundamentals at a good worth.
The Silly takeaway
Even in case you determine to not purchase EFN immediately, the lesson right here is effective: search for mid-cap corporations in much less glamorous sectors with disciplined administration, recurring income fashions, and international scale. Typically the best alternative lies not within the apparent names, however in these quietly executing compounders that fly below the radar.
