Telecommunications for vehicles is the realm of Ituran Location and Control Ltd. The Company provides telematics services and machine-to-machine telematics products, allowing asset owners to transmit computerized information over long distances. The Company’s electrical engineers knit together a mix of telecom, computer science and vehicular technologies to craft systems for sending, receiving and storing data collected across vehicle fleets and other equipment. The market for fleet telematics systems alone is forecast to reach $8.8 billion in 2024, on a healthy annual growth rate of 3.7% (IBIS World). The need to eliminate asset loss and to create operational efficiencies are key drivers of demand. Ituran is among the smaller competitors and uses product and system features to differentiate and elevate its offering.
Ituran reported $319.97 million in total sales in the twelve months ending September 2023, providing $70.00 million in operating income. An operating margin of 21.88% shows that the Company is not held back by narrow profit margins that have been typical of the telematics industry. The Company converted 24.13% of each sales dollar to operating cash flow, adding to cash reserves and providing investment capital.
It appears Ituran leadership has invested well as return on invested capital over the twelve months ending September 2023, was 22.46%. This was well above the Company’s cost of internal capital at 7.88%. We expect the excess return over 14.00% to accrue to shareholders in the long-term.
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