A weekly look at some small-cap stocks making news - or about to.
As of market close on Thursday, Feb. 13, Canada’s S&P/TSX SmallCap Index was up about 21 per cent over the past 12 months. The Russell 2000 in the U.S. was up about 16 per cent over the same period.
Small-cap spotlight
Here’s one small cap in Canada that investors may want to put on their radar screen.
MTY Food Group (MTY-T) shares sank in early trading on Friday after the Montreal-based restaurant franchise company swung to a loss in its latest quarter ended Nov. 30.
The company behind brands such as Jugo Juice, Thai Express and Timothy’s, reported a loss of $55.3-million or $2.34 per share compared to a profit of $16.4-million or 67 cents per share for the same period in 2023. The expectation was for a profit of 46 cents per share, according to Refinitiv Eikon data.
MTY said the year-over-year decrease was due mainly to $64.6-million in impairment charges on property, plant and equipment, intangibles assets and goodwill mostly related to its Papa Murphy’s brand “due to lower than expected past performance and lower expected future growth.” It also said there were foreign exchange losses of $26.3-million taken primarily on intercompany loans.
Acumen Capital analyst Nick Corcoran, who has a “buy” and $65 target on the stock, said in a note that he sees the impairment of Papa Murphy’s as " immaterial given the acquisition occurred almost six years ago.”
Adjusted EBITDA was $58.8-million, which was in line with expectations and down from $60.4-million a year ago.
Revenue came in at $284.5-million up from $280-million a year earlier. The expectation was for revenue of $269.5-million. The company said same-store sales were flat year over year.
MTY said it had 7,079 locations at the end of the fourth quarter, of which 6,827 were franchised or other operator agreements and 252 were corporately owned. It also said 57 per cent of its restaurants were located in the U.S., reducing 66 per cent of sales.
In a conference call with analysts, chief executive officer Eric Lefebvre said MTY’s Canadian operations are doing “exceptionally well” in the first quarter but that it was hard to assess whether it was due to the tax holiday that started on Dec. 14 and ends Feb. 15. He said U.S. sales are “lagging a little bit,” due in part to extreme weather in parts of the country such as wildfires and uncommon snowstorms in states such as Texas, Florida and Lousiana.
He also played down the potential impact of tariffs on its businesses in both Canada and the U.S., saying its operations source most of their products domestically in each country. Exceptions would be fruit and vegetables coming from the U.S. to Canada – if tariffs were imposed on those products – and some packaging coming into the U.S. from outside the country.
“There might be some impacts on equipment as well, where we need stainless steel and aluminum” in the U.S., he says, “but the impact is not super drastic.”
He also said the company is still “aggressively” pursuing acquisitions, even though it didn’t make any deals in 2024.
“There are some transactions in the market; a lot of them are very expensive and we’ve seen some this year that we’re in the stratosphere in terms of valuation and we’re not prepared to do that, so we’re patient,” Mr. Lefebvre said. “We’re going to wait for the market to adjust, and we’re going to wait for the right targets to be available for us to pull the trigger.”
Small-cap summary:
Other small caps making news this week:
Dye & Durham Ltd. (DND-T), the cloud-based legal software company that endured a board battle for most of 2024, reported second-quarter revenue came in at $120.7-million, up 10 per cent from the year-ago period. The expectation was for revenue of $121.2-million in the latest quarter ended Dec. 31. Its net loss of $17.6-million in the quarter improved from the loss of $34.8-million a year earlier.
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Western Forest Products Inc. (WEF-T) reported a net loss of $1.2-million in the fourth quarter, an improvement from a net loss of $14.3-million in the fourth quarter of 2023. Revenue came in at $273.2-million, up from $246.6-million a year earlier, which was above expectations of $261.5-million according to S&P Capital IQ.
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Interfor Corp. (IFP-T) reported a net loss of $49.9-million or 97 cents per share in the fourth quarter, which it said was an improvement from a loss of $169-million or $3.29 per share in the year-earlier period. The expectation was for a loss of 23 cents, according to S&P Capital IQ. Sales were $746.5-million down from $785.9-million a year earlier. Analysts were expecting sales to come in at $753.7-million.
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Mullen Group Ltd. (MTL-T) shares closed down 7 per cent on Thursday after the company reported a drop in profit and revenue that were below expectations.
Before markets opened on Thursday, the Okotoks, Alta.-based company reported fourth-quarter revenue of $499.1-million up slightly from $498.6-million a year earlier but below analysts’ expectations of $518.8-million, according to S&P Capital IQ data.
Net income for the quarter ended Dec. 31 was $18.9-million or 21 cents per share, down from $29.4-million or 32 cents a year ago. Adjusted net income was $28.5-million or 33 cents per share versus $30.4-miillion or 34 cents a year earlier. The expectation was for adjusted earnings of 29 cents per share.
National Bank analyst Cameron Doerksen said the results were also below his expectations but is maintaining his “outperform” (similar to buy) rating and $19 target. “The company faces some ongoing challenges with tepid freight demand and the risk to the broader economy from tariffs, but valuation is compelling,” he wrote in a Feb. 13 note.
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Calian Group Ltd. (CGY-T) shares closed down nearly 10 per cent on Thursday after the company reported lower adjusted profit and EBITDA for its latest quarter and amid uncertainty around tariffs and potential government changes in Canada.
Before markets opened on Thursday, the company reported a loss of $976,000 or 8 cents per share, down from a profit of $5.5-million or 46 cents the year before. Adjusted net profit was $10.5-million or 88 cents per share, down from $14-million or $1.17 per share the year before. Adjusted EBITDA was $17.8-million down from $21.4-million a year earlier. Revenue rose 3 per cent to $185-million for the quarter ended Dec. 31 from $179.2-million for the year-earlier period. The expectation was for revenue of $181.7-million.
Acumen Capital analyst Jim Byrne maintained his “buy” on the stock but reduced his price target to $68 from $70.
“We have adjusted our estimates from the midpoint of guidance slightly lower given some of the uncertainty associated with the changes in the Canadian Federal government and the new administration in the U.S.,” he wrote in a Feb. 13 note. “Our long-term view of the company is unchanged and we believe the company will continue to execute on its three-year strategic plan. Over time we believe the company will benefit from increased spending on defense and cybersecurity in Canada and across the company’s geographic footprint.”
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Yellow Pages Ltd. (Y-T) reported fourth-quarter revenues of $51.4-million, down 8.1 per cent $55-9 million for the same period a year earlier. It said the decrease was mainly due to the decline of its higher-margin digital media and print products and, to a lesser extent, its lower-margin digital services products. Net income for the three-month period ended Dec. 31 was $2.7-million or 20 cents per share versus net income of $12.2-million versus 71 cents a year earlier.
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Precision Drilling Corp. (PD-T) reported fourth-quarter revenue of $468-million, an 8-per-cent decrease from the same quarter last year. The results were below expectations of $487.8-million, according to S&P Capital IQ.
Net earnings attributable to shareholders came in at $15-million or $1.06 per share compared to $147-million or $10.42 per share in the same quarter last year. Net earnings last year included an income tax recovery of $69-million and a gain on acquisition of $26-million. The expectation was for earnings of $1.54 per share in the latest quarter.
National Bank analyst Dan Payne maintained his “sector perform” (simliar to hold) recommendation and $135 target. “While the quarter saw drag, the resilience of its earnings continue to be well-noted, the returns of which remain well-positioned to support accelerated shareholder returns [and] value (plus unattributed upside and operating leverage to come),” he wrote in a Feb. 13 note.
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Birchcliff Energy Ltd. (BIR-T) reported revenue of $153.7-million for its fourth quarter ended Dec. 31, down from $183.3-million a year earlier. The company reported net income of $35.2-million or 13 cents per share compared to a loss of $5.5-million or 2 cents per share a year earlier. Adjusted funds flow from operations came in at $71.8-million or 27 cents per share versus $76.2-million or 29 cents per share a year earlier.
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Acadian Timber Corp. (ADN-T) reported sales of $20.3-million for its fourth quarter ended Dec. 31, which was in line with expectations and compared to $23.8-million in the prior year period. Net income of $5.6-million or 32 cents per share was down from net income of $11.6-million or 68 cents a year earlier.
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Corby Spirit and Wine Ltd. (CSW-A-T, CSW-B-T) reported revenue of $61.7-million for its second quarter ended Dec. 31, which the company said was an increase of 10 per cent compared to the year-earlier period. Net earnings were $17.2-million or 28 cents per share versus $7.3-million or 26 cents in the year-earlier quarter. Adjusted EPS came in at 30 cents per share verus 27 a year earlier.
The company also announced a 5-per-cent dividend increase to 23 cents per share, up from 22 cents payable on March 12 to shareholders of record at the close of business on Feb. 26.
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Computer Modelling Group Ltd. (CMG-T) shares were under pressure this week after the company said customers were becoming more price-sensitive and taking more time to make buying decisions. The comments came alongside the company’s third-quarter report, which included a rise in profit and earnings.
After markets closed on Tuesday, the company reported an 8-per-cent year-over-year rise in its third-quarter revenue to $35.8-million, which was below expectations of $36.4-million according to S&P Capital IQ.
Net income for the quarter ended Dec. 31 increased to $9.6-million, up from $5.6-million in the prior-year period, which the company said was driven by an increase in operating profit and “significant” foreign exchange rate gains.
Investors appeared concerned about management comments regarding near-term growth and some analysts lowered their price targets.
CIBC analyst Scott Fletcher downgraded the stock to “neutral” (similar to hold) from “outperformer” similar to “buy” and lowered his target to $11 from $14.50.
“Flat revenue growth (inclusive of a [roughly] 2 per cent [currency] tailwind) and modest margin compression in the core CMG segment (renamed Reservoir & Production), coupled with management commentary suggesting that customers have become increasingly price sensitive and are extending their decision-making timelines, put near-term growth prospects at risk,” he wrote in a note. “While CMG does appear to have a clear strategy to re-accelerate recurring revenue growth, we are less confident that the company will hit double-digit growth targets in the core business in F2026.”
Other changes include: Raymond James’ Steven Li to $13 from $15 with an “outperform” rating and Ventum Capital Markets’ Amr Ezzat to $14 from $15 with a “buy” rating. The average is $13.43.
-with a file from Dave Leeder
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Cineplex Inc. (CGX-T) reported fourth-quarter earnings of $3.3-million or 5 cents per share for the quarter ended Dec. 31 compared with a loss of $9-million or 14 cents a year earlier. Revenue rose to $362.7-million, up from $315.1-million a year earlier. For more on the company’s earnings and management commentary, check out this Canadian Press report here
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WildBrain Ltd. (WILD-T), which produces kids and family entertainment content, reported revenue of $125.8-million for its second quarter ended Dec. 31, up 7 per cent from the same quarter a year earlier. The expectation was for earnings to come in at $128.8-million, according to S&P Capital IQ data.
Its net loss from continuing operations was $69.1-million, compared with net income of $7-million a year earlier. Adjusted EBITDA of $22.3-million was up 11 per cent year over year.
In the second quarter, the company announced an agreement to sell a two-thirds stake in its television broadcast business to an independent, Canadian-owned children’s studio. National Bank’s Adam Shine raised his WildBrain target to $1.75 from $1.50 with a “sector perform” rating. The average is $2.09.
-with a file from Dave Leeder.
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Quipt Home Medical Corp. (QIPT-T), a U.S.-based home medical equipment provider, reported first-quarter revenue of US$61.4-million compared to US$62.6-million a year earlier. Its net loss was US$1.1-million, or 3 cents US per share, versus a loss of US$1.5-million or 4 cents US a year earlier.
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Shares of MDA Space Ltd. (MDA-T) soared this week after the company said it added $750-million to its contract to build satellites for Globalstar Inc., a U.S. telecommunications company backed by Apple Inc. (AAPL-Q), which is funding Globalstar’s satellite constellation as part of its own push into the telecom services sector. Read the full story from the Globe’s Irene Galea here
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Coveo Solutions Ltd. (CVO-T) shares soared by as much as 35 per cent this week (before pulling back) after the company said it swung to a profit in its latest quarter and cited an increase in bookings.
After markets closed on Monday, the company reported revenue of US$34-million, which was roughly in line with expectations and up 7 per cent from US$31.8-million a year earlier. Net income came in at US$4-million, a huge improvement from a loss of US$6.2-million a year earlier.
The company trimmed its annual guidance to the lower end of its prior range to reflect adverse currency moves, Canaccord Genuity analyst Doug Taylor said in a note. He kept his “buy” recommendation and $11 target, partly citing an acceleration of the company’s bookings.
BMO Capital Market analyst Thanos Moschopoulos, who has an “outperform” (similar to buy) and $10 target on the stock, said in a note he believes it’s undervalued relative to its “market opportunity and the strength of its customer list/partnerships.”
Coveo also announced this week that its chair Louis Têtu will become executive chair on April 1, while founder, president and chief technology officer (CTO) Laurent Simoneau will also take on the CEO role. John Grosshans, the chief revenue officer will become chief operating officer and Marc Sanfacon, one of the company’s co-founders and current senior vice-president of technology, will be promoted to CTO.
Upcoming small-cap earnings:
Feb. 19: Innergex Renewable Energy Inc. (INE-T), Sienna Senior Living Inc. (SIA-T), TFI International Inc. (TFII-T), Firan Technology Group Corp. (FTG-T)
Feb. 20: Cascades Inc. (CAS-T), Chorus Aviation (CHR-T), Altus Group Ltd. (AIF-T); Supremex Inc. (SXP-T)
Feb. 24: Spin Master Corp. (TOY-T)
Feb. 25: Eqb Inc. (EQB-T)
Feb. 26: Element Fleet Management Corp. (EFN-T), Source Energy Services Ltd. (SHLE-T), High Liner Foods Incorporated (HLF-T)
Feb. 27: Pason Systems Inc. (PSI-T), Doman Building Materials Group Ltd. (DBM-T); Trulieve Cannabis Corp. (TRUL-CN)
Feb. 28: Boralex inc. (BLX-T)
March 3: DRI Healthcare Trust (DHT-UN-T), Curaleaf Holdings, Inc. (CURA-T)
March 4: Pet Valu Holdings Ltd. (PET-T)
March 5: Aecon Group Inc. (ARE-T), Thinkific Labs Inc. (THNC-T), BSR Real Estate Investment Trust (HOM-UN-T), KP Tissue Inc. (KPT-T), AirBoss of America Corp. (BOS-T), Automotive Properties Real Estate Investment Trust (APR-UN-T), North American Construction Group Ltd. (NOA-T)
March 6: Ayr Wellness Inc. (AYA-A-CN), TerrAscend Corp. (TSND-T), Major Drilling Group International (MDI-T)
March 7: Total Energy Services Inc. (TOT-T), MDA Space Ltd. (MDA-T)
March 10: Nexus Industrial REIT (NXR-UN-T)
March 11: Dorel Industries Inc. (DII-B-T)
March 13: NFI Group Inc. (NFI-T); Bird Construction Inc. (BDT-T); Ballard Power Systems (BLDP-T), Calfrac Well Services Ltd. (CFW-T)
March 19: Gold Royalty Corp. (GROY-A)