Ituran: A Daring Ride Into The Danger Zone

This is a special report on Ituran Location and Control Ltd. (ITRN) with emphasis on its unique status in the transportation as a service [TAAS] niche market. 

Ituran Location and Control Ltd is a small cap member of the technology sector as a communication equipment firm. The company was incorporated in 1994 and is headquartered in Azor, Israel. While Ituran's list of electronic products, software, and services is impressive, that dry listing fails to capture the sizzle that drives this transportation safety resource.

The world is in constant change and full of diverse, demanding, driven and conflicted people and processes. Companies workers, and customers demand prompt and assured delivery of their every need.

Collaboration is required for every transaction and delivery. Ituran provides products and services that create communication and value for all participants making efforts to get themselves, or their products, from here to there, or anywhere.  

To do this, Itruran  bundles services to insure, protect, monitor and manage drivers, vehicles and fleets in Mexico, Brazil, Argentina, India, Israel, the US, and elsewhere. Their bundles include logistical real time monitoring of couriers, micro-mobility vehicles, and fleets.  As of December 31, 2020, Ituran served approximately 1,768,000 end-users throughout the world.

Opportunities and challenges for Ituran services are vast, fast, ever-changing, and dependent on locations, environments and budgets. Two stories stand out from my exclusive conversation with Ariad Sommer, Ituran USA CEO.

First, the biggest purchase of a lifetime for the average citizen of most of the world, except the US and EU, is not a house but a vehicle. That citizen is frequently so hard-pressed to make payments and keep a vehicle in-service, that the expense for insurance against loss gets dropped. In Brazil, Ituran launched a product which includes their telematics including in insurance which is now market leader and is aiming to replicate that success across its other markets. It found that partnering with owners, vehicle manufacturers, governments, and insurance companies, reduces costs to a point where insurance gets included and owners are covered for theft.

Second, amongst Ituran holdings, its successful early-stage mobility technology holding, Bringg, completed a series-E investment round of $100 million at a valuation of $1bn. Following the round, Ituran's undiluted holdings are 17.2%.

Eyal Sheratzky, CEO of Ituran, commented, "Bringg is a company that Ituran seeded in 2014 and even after this latest funding round, we remain the largest shareholder of the company. Ituran is constantly looking to invest and grow companies which are building disruptive mobility technologies with the potential to become future global leaders. Our investment in Bringg is a successful element of this strategy and Bringg has shown significant progress especially in the past year, with fast growing sales to top-tier global companies. We are pleased that our strategy has borne fruit and is demonstrating a strong value-add to Ituran and its shareholders."

The investment sets Bringg's valuation at $1 billion, making it the first and only unicorn in last-mile delivery and fulfillment cloud technology. The market expects a Bringg IPO in the next couple of quarters. Thus Bringg is a hidden but significant potential upside for Ituran if it works out.

Three key data points gauge dividend equities or funds like Ituran Location and Control Ltd (ITRN):

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money. 

ITRN Price

As you can see from the examples cited above, Ituran is a catalyst for vehicle owners, managers, governments, entrepreneurs, and insurers to join forces to counteract theft, misdirection and accidental losses. This is a never-ending story and a strong endorsement for Ituran's unique transportation as a service model.

In 2019 the year the Covid 19 pandemic started, ITRN stock price reached an all time high of $37.96 in late February. Currently the company appears on pace to reach and exceed that milestone by March 2022.

ITRN Dividends

With success in developing market strategies and new partnerships in more locations after Covid, the company allocated $3 million per quarter to shareholder dividends. Historically it had a dividend policy based on $5 million in quarterly dividend payouts. An increase could be another force to propel stock price higher.  A dividend yield of 4.1% at a stock price of $40 might be achieved in 2022.

ITRN Returns

Over the next year at this time a $1000 investment in ITRN might generate $20.62 in cash dividends. And a single share bought at the June 25th price was $27.15! So, if ITRN is your kind of TAAS technology investment, Ituran Location and Control is showing share price $6.53 above the expected annual dividend income from $1,000 invested. This suggests you wait until ITRN price falls back to about $24.00 before buying shares of ITRN for the present.  However, be alert for company dividend increases and/or the Bringg IPO, which could help propel ITRN share prices to new heights and change your buy point.

All of the estimates above, of course, are speculation based on the past history of Ituran Location and Control Ltd. Only time and money invested in this stock will determine its worth. Keep ITRN on your watchlist and pounce whenever the annual dividend from $1k invested exceeds the single share price.

Related Articles:
Ituran Location & Control: Leading The Way In Mobility Technology
Ituran Is Set To Recover

Disclosure: This article is part of a new “UnderCovered” series of exclusive articles featuring companies with limited coverage. Authors are compensated by TalkMarkets for their ...

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Michele Grant 1 year ago Member's comment

A stock that fights crime? Count me in! $ITRN

Dick Kaplan 1 year ago Member's comment

A very balanced take on an interesting stock. Thank you.

Kevin N. Harris 1 year ago Member's comment

Why "danger zone?" It sounds like this stock has performed very well as of late and has a promising future.

Jason Green 1 year ago Member's comment

This is a very informative article, thank you.