A weekly look at some small-cap stocks making news - or about to.
As of market close on Thursday, May 1, Canada’s S&P/TSX SmallCap Index was up by about 6 per cent over the past 12 months, not including dividends. The Russell 2000 in the U.S. was flat over the same period.
Small-cap spotlight
A&W Food Services of Canada Inc. (AW-T) shares rose in early Friday trading after the burger company reported first-quarter revenue and same-store sales growth that beat expectations.
A&W also lowered its earnings guidance for the year, as expected, citing the negative impact of the tariff war on Canadian jobs, consumer confidence and discretionary spending.
The lower guidance comes after other fast-food chains such as McDonald’s, Domino’s Pizza, Chipotle Mexican Grill and Starbucks warned in recent days that consumers were spending less on dining out.
Before markets opened on Friday, the Vancouver-based burger chain reported revenue of $61.1-million for the quarter ended March 23, up 4 per cent from $58.8-million a year earlier. The result was ahead of expectations of $60.5-million, according to S&P Capital IQ.
A&W said the revenue increase is from franchising revenue, which was up primarily due to higher equipment sales as a result of an increase in the number of A&W restaurants modernized during the quarter.
Same-store sales rose by 0.4 per cent compared to a year earlier. The expectation was for a drop of 0.5 per cent.
Net income of $9.3-million was up from $7.5-million a year ago, which was below expectations of $14.2-million. Earnings per share came in at 37 cents, down from 50 cents a year ago and below expectations of 53 cents.
The company lowered its 2025 outlook for adjusted EBITDA, system sales growth and same-store-sales growth from what it presented late last year. It expects adjusted EBITDA to be between $96-million and $101-million, down from previous guidance of $98-million and $103-million.
Annual system sales growth is expected to be between 1.5 and 4.5 per cent, down from the previous guidance of 5 to 7 per cent for the year. Annual same-store sales are expected to rise by between zero and 3 per cent, down from 3 to 4.5 per cent.
A&W said it expects to open more restaurants by the end of this year, or between 1,085 and 1,100, up from 1,080 and 1,095 previously guided.
Small-cap summary
Other small caps making news this week:
Martinrea International Inc. (MRE-T) reported a drop in sales and profit for its first quarter ended March 31 compared to the same time last year.
After markets closed on Thursday, the auto parts maker reported sales of $1.17-billion, down 11.8 per cent from $1.32-billion a year earlier. The result was below expectations of $1.24-billion, according to S&P Capital IQ.
Net income of $17.5-million or 24 cents per share dropped 60 per cent from $43.7-million or 56 cents a year earlier. The earnings were above expectations of 20 cents.
Adjusted EBITDA of $140.9 million was down from $162.8-million last year.
“As we previously discussed, our fourth quarter results were impacted by an OEM vehicle inventory correction, which mainly affected the Detroit 3 customer base in North America,” stated CEO Pat D’Eramo in a release. “While we continued to see some impact from these adjustments in the first quarter, volumes improved, and inventories are now at a more normal level based on market demand.”
He also said that U.S. tariffs on automotive imports are “clouding the outlook” for the business and industry.
“These tariffs have already had a disruptive effect, with OEMs announcing temporary shutdowns of assembly plants and volume reductions on certain programs. Some of this is also related to continued weak demand for EV platforms,” he stated
CIBC Capital Markets analyst Krista Friesen kept her “neutral” (similar to hold) rating and raised her price target on the stock to $8.75 from $8.50 after the earnings report.
“MRE posted a solid quarter, beating our and the Street’s expectations, as tariffs continue to loom over the auto industry,” she wrote in a note. “The company demonstrated a focus on managing its controllable factors, such as reducing discretionary spending and offering customers a level of flexibility regarding production locations. While we appreciate MRE for these strategic initiatives, we remain cautious about the ongoing challenges facing the industry.”
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Black Diamond Group Ltd. (BDI-T) reported higher revenue and profit for its first quarter compared to the prior-year period, which also beat expectations.
After markets closed on Thursday, the company reported revenue of $102.2-million for the quarter ended March 31, up 39 per cent from $72.6-million a year ago. Profit of $5.8-million or 9 cents per share compared to $1.5-million or 2 cents a year ago.
The expectation was for revenue of $83.8-million and earnings of 8 cents per share.
The company rents and sells modular space and workforce accommodations.
Acumen Capital analyst Trevor Reynolds said the revenue came in 16.4 per cent above his team’s estimate of $87.8-million.
“Management continues to monitor the impact of tariffs on the economic environment but currently expect minimal impact as they operate locally within their geographic regions and tend not to move assets across the border,” he said in a note.
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Methanex Corp. (MX-T) reported higher profit but lower revenue for its first quarter ended March 31 compared to a year earlier.
After markets closed on Wednesday, the company reported net income of US$111-million or US$1.44 per share for the quarter compared to net income of US$45-million or 67 cents US per share for the same period a year ago.
Adjusted net income was US$88-million or US$1.30 per share, which was ahead of expectations of US$1.26 and compared to US$84-million or US$1.24 per share last year.
Adjusted EBITDA of $248-million was below expectations of $264-million and compared to US$224-million last year.
Revenue came in at US$896-million, down from US$916-million last year. The expectation was for revenue of US$1.02-billion, according to S&P Capital IQ.
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Allied Properties Real Estate Investment Trust (AP-UN-T) reported higher revenue but a wider loss for its first quarter ended March 31.
After markets closed on Wednesday, the REIT reported revenue of $150.6-million, up 5 per cent from $143.6-million a year earlier. The result was below expectations of $152.8-million, according to S&P Capital IQ.
Its net loss widened to $107-7-million versus $18.8-million a year earlier.
Funds from operations (FFO) were $71.5-milion or 51 cents per unit down from $80.8-million or 58 cents last year. Adjusted FFO was $65.3-million or 47 cents per unit down from $75.1-million or 54 cents last year. The expectation was for adjusted FFO of 45 cents per unit.
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Spin Master Corp. (TOY-T) reported first-quarter results that were ahead of expectations.
After markets closed on Wednesday, the toymaker reported revenue of US$359.3-million for the quarter ended March 31, up from US$316.2-million a year earlier. The expectation was for revenue of US$326.9-million, according to S&P Capital IQ.
Its net loss was US$24.5-million or 24 cents US per share compared to a loss of US$54.8-million or 53 cents per share a year earlier. Its adjusted net loss was US$12-million or 12 cents US per share compared to a loss of US$19.5-million or 19 cents US per share a year earlier. The expectation was for a loss of 18 cents.
The company also withdrew its 2025 outlook for gross product sales, revenue, and adjusted EBITDA margin provided in February, citing “uncertainty arising from ongoing changes to global tariff policies, which make it difficult to provide reliable projections.”
Canaccord Genuity analyst Luke Hannan lowered his rating to “hold” from “buy” and dropped his target to $26 from $35.
In a May 1 note, Mr. Hannan said Spin Master’s first-quarter earnings results were ahead of expectations but said the key takeaway for investors is the withdrawn guidance.
“Tariffs on Chinese imports into the U.S. have ratcheted up significantly since the company introduced 2025 guidance in February, making it difficult for Spin Master to predict where profitability goes in the near term,” he wrote.
“We recognize that the company is better positioned than most in the industry, given its greater scale, and having already made progress through cost savings initiatives and rebasing its supply chains to countries with lower tariff rates,” he added.
He said he’s positive on the company’s ability to capture market share over the long term and growing its “highly profitable” entertainment and digital games segments.
“With that said, we expect that the withdrawn guidance, coupled with a lack of visibility into when US-China trade tensions will ease, are likely to keep Spin Master shares range-bound in the near term,” he stated.
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TerraVest Industries Inc. (TVK-T) announced Wednesday that it has acquired Springfield, IL-based Simplex, Inc., a tech company that manufactures electrical test systems and fuel supply systems for the standby power generation industry, for US$28-million.
“The market for these products has been driven by demand for emergency backup power generators at data centres, hospitals and other public utilities,” the company stated.
It said the purchase price includes certain liabilities and is subject to customary closing adjustments.
On Thursday, the company said it acquired Quebec-based Tankcon FRP Inc., a North American fibre-reinforced polymer (FRP) tank trailer business for $27.8-million. “Tankcon is a widely recognized manufacturer of FRP tank trailers serving the North American transportation industry,” the company stated.
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Real Matters Inc. (REAL-T) reported a drop in revenue and swung to a loss in its second quarter ended March 31.
Before markets opened on Wednesday, the company that provides appraisal and title services in Canada and the U.S., reported revenue of US$37.3-million, down from US$42.2-million a year earlier. The expectation was for revenue of US$40.2-million.
The company said increased volumes in its U.S. title and Canadian segments were offset by lower year-over-year U.S. appraisal volumes.
Its net loss was US$2.2-million or 3 cents US per share versus a profit of US$2.1-million or 3 cents US a year earlier. Its adjusted loss was US$1.2-million or 2 cents US per share versus a profit of US$1.3-million or 2 cents US a year ago.
Adjusted EBITDA was a loss US$1.9-million, below expectations of a loss of US$1.8-million and compared to positive adjusted EBITDA of US$700,000 a year ago.
Canaccord Genuity analyst Robert Young kept his “buy” rating but lowered his target to $8 from $8.50 after the earnings report.
“Management has executed well against the difficult macro, setting up the company for operating leverage as volumes recover from the current multi-year low,” he said in a note. “That said, we expect seasonality and uncertain timing on rate cuts to remain a headwind in [the third quarter].”
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Morguard Real Estate Investment Trust (MRT-UN-T) reported lower first-quarter revenue but a smaller loss compared to the same quarter last year.
After markets closed on Wednesday, the REIT reported revenue of $60.3-million for the quarter ended March 31, down from $64.4-million a year earlier. Its net loss was $11.7-million, an improvement from a loss of $36.8-million a year earlier.
Funds from operations (FFO) came in at $9.2-million or 13 cents per unit down from $13.4-million or 18 cents a year ago. Adjusted FFO was $807,000 or a penny per unit versus $7.4-million or 11 cents last year. The expectation was for 16 cents in the latest quarter.
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Morguard North American REIT (MRG-UN-T) reported higher revenue and profit for its first quarter ended March 31.
After markets closed on Tuesday, the REIT reported revenue of $90.3-million, up from $84.3-million a year ago. The result was slightly ahead of expectations of $89.9-million.
Net income of $38.3-million compared to $24.8-million a year ago.
Funds from operations came in at $24-million or 43 cents per unit versus $23.4-million or 41 cents a year ago. The expectation was for 42 cents per unit.
CIBC Capital Markets analyst Dean Wilkinson kept his “outperformer” (similar to buy) rating and $22 price target after the earnings report.
“MRG reported a strong Q1 marked by continued rental gains in the Canadian portfolio and occupancy gains in the U.S., somewhat offset by a softening of Canadian occupancy and a further slowing in U.S. rental rate growth (-1 per cent sequentially),” he wrote.
“Looking forward, we see the Canadian assets (41 per cent of the portfolio) as having the dual drivers of both occupancy and rental rate increases, while the U.S. portfolio (59 per cent) is more likely to be rate-driven, which may prove to be slightly more challenging in the near term.”
He also said he expects more buybacks “given the REIT’s strong liquidity position and the current trading discount.”
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Badger Infrastructure Solutions Ltd. (BDGI-T) reported higher revenue and profit for its first quarter versus a year ago.
After markets closed on Tuesday, the Calgary-based company reported revenue of $172.6-million, up 7 per cent from $161.6-million for the same quarter in 2024.
Net earnings of $3.2-million or 10 cents per share compared to net earnings of $1.8-million or 5 cents a year ago. Adjusted earnings were $6.4-million or 19 cents per share compared with $4.9-million or 14 cents last year.
Adjusted EBITDA improved to $33.8 million, up 16% from 2024.
Canaccord Genuity analyst Yuri Lynk said the revenue was above his estimate of $171-million and just below the FactSet consensus of $174-million.
In a note, he stated that management reiterated its 2025 outlook, which calls for fleet growth between 4 and 7 per cent, compared to 7 per cent growth in 2024.
He reiterated his “buy” and $52 target.
CIBC World Markets analyst Krista Friesen increased her target to $53 from $52 and kept her “outperformer” (similar to buy) rating.
“BDGI delivered a strong Q1/25 performance, underpinned by its focus on operational excellence, disciplined cost management, and resilience in the face of external uncertainties,” she wrote in a note. “With the company continuing to roll out its operational excellence initiatives, we still see room for margin expansion.”
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Algoma Steel Group Inc. (ASTL-T) reported lower revenue and swung to a loss in the first quarter ended March 31.
After markets closed on Tuesday, the company reported revenue of $517.1-million, compared to $620.6-million in the prior-year quarter. The company attributed the decline to lower pricing resulting from weakening market conditions.
Its net loss was $24.5-million or 48 cents per share, compared to net income of $28-million or 10 cents in the prior-year quarter.
Its adjusted EBITDA loss was $46.7-million compared to a profit of $41.6-million a year ago.
The company also announced that it is delaying the start of its much-anticipated electric arc furnace (EAF) technology by a few months, which has been billed as a game changer at the Canadian steel maker. Read the full story from Globe mining reporter Niall McGee here
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First National Financial Corp. (FN-T) reported first-quarter earnings that were below expectations.
After markets closed on Tuesday, the company said net income was $24.6-million or 39 cents per share for the quarter ended March 31 compared to $49.9-million or 82 cents a year ago. The result was below expectations of 77 cents, according to S&P Capital IQ.
Mortgages under administration increased 7 per cent to a record $155.4-billion compared to $145.1-billion at March 31, 2024
The company said it expects increased year-over-year single-family originations in the next two quarters, citing strength in new activity.
“With five-year fixed mortgage rates already 0.85-to-1 per cent lower than a year ago and the Bank of Canada expected to resume cutting overnight rates over the next six months, housing activity may prove resilient,” the company stated, but added that U.S. tariffs could have a negative impact and increase the risk of recession in the country.
National Bank Financial analyst Jaeme Gloyn lowered his target to $39 from $43 and maintained his “sector perform” (similar to a hold) rating following the earnings release.
He said the company’s revenues of $192-million fell well short of the Street’s estimates of $209-million and his team’s $218-million estimate.
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Upcoming small-cap earnings:
May 5: Ero Copper Corp. (ERO-T), BTB Real Estate Investment Trust (BTB-UN-T), Gibson Energy Inc. (GEI-T), Timbercreek Financial (TF-T), Ag Growth International Inc. (AFN-T)
May 6: Western Forest Products Inc. (WEF-T), Minto Apartment Real Estate Investment Trust (MI-UN-T), Boardwalk Real Estate Investment Trust (BEI-UN-T), Extendicare Inc. (EXE-T), Thinkific Labs Inc. (THNC-T), Pet Valu Holdings Ltd. (PET-T), Centerra Gold Inc. (CG-T), Information Services Corp. (ISC-T), International Petroleum Corp. (IPC-T), Telesat Corp. (TSAT-T), DIRTT Environmental Solutions Ltd. (DRT-T)
May 7: Killam Apartment REIT (KMP-UN-T), Green Thumb Industries Inc. (GTII-CN), Chorus Aviation Inc. (CHR-T), Crombie Real Estate Investment Trust (CRR-UN-T), SmartCentres Real Estate Investment Trust (SRU-UN-T), First Capital REIT (FCR-UN-T), Trulieve Cannabis Corp. (TRUL-CN), Pollard Banknote Ltd. (PBL-T), Acadian Timber Corp. (ADN-T), AirBoss of America Corp. (BOS-T), Kits Eyecare Ltd. (KITS-T), Pizza Pizza Royalty Corp. (PZA-T), Aris Mining Corp. (ARIS-T), Kneat.com Inc. (KSI-T), Sprott Inc. (SII-T)
May 8: Alaris Equity Partners Income Trust (AD-UN-T), TerrAscend Corp. (TSND-T), Cascades Inc. (CAS-T), NFI Group Inc. (NFI-T), Curaleaf Holdings Inc.(CURA-T), Cascades Inc. (CAS-T), Maple Leaf Foods Inc. (MFI-I), Interfor Corp. (IFP-T), Hut 8 Corp. (HUT-T), Altus Group Ltd. (AIF-T), Canfor Corp. (CFP-T), Canfor Pulp Products Inc. (CFX-T), Source Energy Services Ltd. (SHLE-T), MDA Space (MDA-T), Profound Medical Corp. (PRN-T), Doman Building Materials Group Ltd. (DBM-T), Enerflex Ltd. (EFX-T), ECN Capital Corp. (ECN-T), Plaza Retail REIT (PLZ-UN-T), GDI Integrated Facility Services Inc. (GDI-T), HLS Therapeutics Inc. (HLS-T), Energy Fuels Inc. (EFR-T), Cronos Group Inc. (CRON-T), Frontera Energy Corp. (FEC-T), Knight Therapeutics Inc. (GUD-T)
May 9: Cineplex Inc. (CGX-T), Neo Performance Materials Inc. (NEO-T), Fiera Capital Corp. (FSZ-T), Boston Pizza Royalties Income Fund (BPF-UN-T)
May 12: K92 Mining Inc. (KNT-T), Hudbay Minerals Inc. (HBM-T), Ensign Energy Services Inc. (ESI-T), DRI Healthcare Trust (DHT-UN-T), Dorel Industries Inc. (DII-B-T)
May 13: Grown Rogue International Inc. (GRIN-CN), Wesdome Gold Mines Ltd. (WDO-T), Westport Fuel Systems Inc. (WPRT-T), Dye & Durham Ltd. (DND-T), Aimia Inc. (AIM-T)
May 14: Automotive Properties Real Estate Investment Trust (APR-UN-T), KP Tissue Inc. (KPT-T), Boralex Inc. (BLX-T), AutoCanada Inc. (ACQ-T), H&R Real Estate Investment Trust (HR-UN-T), North American Construction Group Ltd. (NOA-T), Bird Construction Inc. (BDT-T), Boralex Inc. (BLX-T), K-Bro Linen Inc. (KBL-T), High Liner Foods Incorporated (HLF-T), Calian Group Ltd. (CGY-T), Wildbrain Ltd. (WILD-T)
May 15: Corby Spirit and Wine Limited (CSW-A-T), Intermap Technologies (IMP-T), InterRent Real Estate Investment Trust (IIP-UN-T), Quarterhill Inc. (QTRH-T)
May 22: Lightspeed Commerce Inc. (LSPD-T), Silvercorp Inc. (SVM-T)
May 28: EQB Inc. (EQB-T)
June 10: Stingray Group Inc. (RAY-A-B)