A weekly look at some small-cap stocks making news - or about to.
As of midday trading on Thursday, Feb. 27, Canada’s S&P/TSX SmallCap Index was up about 14 per cent over the past 12 months. The Russell 2000 in the U.S. was up about 5 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.
Investors will be looking at how much humans have spoiled their cats and dogs in recent months when Pet Valu Holdings Ltd. (PET-T) reports its latest earnings next week.
The specialty retailer of pet food, toys and other supplies is expected to release its fourth-quarter and year-end results before markets open on Tuesday – and analysts are cautious amid economic uncertainties.
Analysts are looking for Pet Valu’s fourth quarter revenue to come in at $292-million, up from $286.9-million a year earlier, according to S&P Capital IQ. Earnings per share are expected to be 40 cents versus 54 cents a year earlier.
The lower expected earnings reflect increased costs related to the company’s new distribution center in the GTA, as well as higher promotional activity, analysts say. Last year was also a very strong quarter, making comparable numbers appear less favourable.
Stifel analyst Martin Landry, who has a “hold” and $27.50 target on the stock, expects fourth-quarter revenue to grow 5 per cent year-over-year, to reach $301-million, above consensus, and same-store-sales growth of 1.5 per cent year-over-year compared to a decline of 2.5 per cent year-over-year in the third quarter.
“However, we do not expect much change in recent trends where customers continue to prioritize needs-based purchases over discretionary items like toys,” he wrote in a Feb. 23 note. “Aside from same-store-sales growth, revenues should be boosted by store openings and increased wholesale revenue.”
He expects same-store-sales to increase by 2.7 per cent in 2025 versus last year, with a slower pace at the start due to severe weather. He also expects gross margin pressure to linger into 2025 driven in part by a cost increase from its Vancouver and Calgary distribution centers and higher promotions offset by automation efficiencies and other supply chain savings.
Mr. Landry expects earnings per share guidance could range between $1.60 to $1.65 for 2025, which represents a growth rate of 6 per cent year-over-year, and for Pet Valu to grow its revenues in the high-single digits this year.
“While we see limited downside risks for the shares at current levels, we also see limited catalysts to move them higher,” Mr. Landry wrote. “We would need to see higher EPS [earnings per share] growth rates or lower valuation to turn positive on Pet Valu.”
CIBC analyst Mark Petrie lowered his target to $29 from $31 ahead of the earnings but kept his “outperformer” (similar to a buy) recommendation.
In a Feb. 25 note, Mr. Petrie said he expects a weaker Canadian dollar against the U.S. dollar and tariff uncertainty to impact the company this year.
“We remain cautious regarding consumer demand and expect product mix to remain a headwind – albeit dissipating – to profitability,” he wrote.
The average target price for the stock is $31.82, according to S&P Capital IQ.
Pet Valu shares are down 20 per cent over the past year and are trading near their 52-week low of $23.58 reached in Aug, 2024. The stock’s 52-week high was $32.74 in March, 2024.
Small-cap summary
Other small caps making news this week
Shares of 5N Plus Inc. (VNP-T) dropped this week after the semiconductor and specialty metals company reported earnings that missed expectations.
After markets closed on Tuesday, the Montreal-based company reported revenue of US$70.9-million for the quarter ended Dec. 31 compared to US$65.1-million a year earlier. The result was below expectations of US$73.7-million, according to S&P Capital IQ.
Net earnings came in at US$1-million compared to US$2.3-million a year earlier. The company reported earnings per share of 2 cents US, below expectations of 4 cents US.
Ventum Capital Markets analyst Amr Ezzat reiterated his “buy” and $10 target on the stock post-earnings release, stating in a Feb. 26 note that management raised its 2025 guidance, “reinforcing our view that upside was inevitable.”
He said the company has a compelling investment case as a “transformed, high-calibre materials innovator at the nexus of renewable energy, space-based technologies, and semiconductors.”
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Spin Master Corp. (TOY-T) shares fell by as much as 15 per cent this week after the toy and game maker reported weaker-than-anticipated fourth-quarter results.
After markets closed on Monday, the Toronto-based company reported revenue of US$649.1-million, an increase of 29.1 per cent year-over-year but below expectations of US$659.5-million. Earnings per share of 55 cents US were below expectations of 68 cents US per share.
On Tuesday, Spin Master’s CEO said he has an eye on numerous points of “volatility” the toy maker could face this year. Max Rangel says the Toronto-based company stands to be impacted by 10-per-cent tariffs U.S. President Donald Trump has levied on goods entering his country from China. (See the full story from the Canadian Press here.)
Analysts lowered their target prices after the earnings report. Stifel’s Martin Landry dropped his to $40 from $45 with a “buy” rating, Canaccord Genuity’s Luke Hannan went to $35 from $44 with a “buy” rating, RBC’s Drew McReynolds dropped his target to $41 from $43 with an “outperform” rating, TD Cowen’s Brian Morrison went to $38 from $46 with a “buy” rating and National Bank’s Adam Shine lowered his target to $32 from $35 with a “sector perform” rating.
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Shares of Innergex Renewable Energy Inc. (INE-T) are up about 55 per cent this week after the company announced a definitive agreement to be acquired by Caisse de dépôt et placement du Québec.
Under the agreement, CDPQ will pay $13.75 per share in cash for Innergex’s common shares and $25 per share for the company’s Series A and C preferred shares, plus accrued and unpaid dividends. CDPQ is Innergex’s second-largest shareholder after Hydro-Quebec, which holds a 19.9 per cent stake in the company.
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Maple Leaf Foods Inc. (MFI-T) shares rose by about 5 per cent this week after the company’s fourth-quarter earnings beat expectations.
Before markets opened on Tuesday, the company reported sales of $1.24-billion, up from $1.19-billion in the year-earlier period. The expectation was for sales of $1.22-billion.
Maple Leaf reported a profit of $53.5-million or 43 cents per share compared with a loss of $9.3-million or 8 cents a year earlier. Adjusted earnings of 38 cents compared to 8 cents a year earlier and ahead of expectations of 24 cents.
The company also said it expects revenue to grow in the mid-single-digit range in 2025.
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Dye & Durham (DND-T) shares rose about 8 per cent this week after a major shareholder proposed to take the Toronto-based legal software company private.
Plantro Ltd., controlled by former Dye & Durham chief executive officer Matthew Proud, says it’s prepared to offer $20 a share, which would be 70 per cent higher than the company’s closing price of $11.75 on Friday. Read the full story from the Globe here
Dye & Durham’s shares shot up by about 25 per cent on Monday after news of the proposal was reported by Bloomberg.
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High Liner Foods Inc. (HLF-T) reported sales of US$235-million for its fourth quarter compared to US$237.1-million a year earlier. The expectation was for sales of US$214.8-million, according to S&P Capital IQ estimates.
Adjusted net income was US$12.5-million or 41 cents US per share compared to US$7.3-million or 23 cents US a year earlier. The expectation was for earnings of 22 cents US in the latest quarter.
In a release before markets opened on Wednesday, the company said the later timing of the Lenten period (from March 5 to April 17 this year versus Feb. 14 to March 28, 2024), which it called “a key sales period for the seafood industry,” will impact its year-over-year performance in the first quarter of 2025.
“In a dynamic market and evolving trade environment, we are poised to focus on the factors within our control,” stated CEO Paul Jewer. “We anticipate that despite fluctuations in performance due to market volatility and geopolitical challenges, we will still deliver another year of strong free cash flow generation.”
The company also said it continues to pursue M&A opportunities.
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Fiera Capital Corp. (FSZ-T) shares fell by as much as 13 per cent this week after the asset management firm reported earnings below expectations.
Before markets opened on Wednesday, the company reported revenues of $184-million for the fourth quarter ended Dec. 31, down from $211-million a year earlier. The result was below expectations of $210-million, according to S&P Capital IQ estimates.
Its net loss was $192,000 versus a profit of $39.4-million a year earlier. Adjusted earnings of $22.8-million or 21 cents per share compared to $50.2-million or 37 cents a year earlier. The expectation was for adjusted earnings of 38 cents per share. Adjusted EBITDA came in at $53.4-million versus $77.6-million a year earlier.
Assets under management (AUM) increased to $167.1-billion as of Dec. 31, up from $161.7-billion at the end of 2023. The company said 3.3-per-cent year-over-year increase was due to a “favourable market and foreign exchange impact of $18.7-billion, primarily from equity mandates, partly offset by negative net organic growth of $13-billion,” in public markets.
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Dirtt Environmental Solutions Ltd. (DRT-T) shares soared on Thursday after the industrialized construction company reported fourth-quarter earnings above expectations.
After markets closed on Wednesday, the Calgary-based company reported revenue of US$48.9-million, down from US$50.9-million a year earlier. The expectation was for revenue of US$44.2-million.
Net income of US$4-million or 2 cents US per share compared to US$955,000 or a penny per share a year earlier.
Upcoming small-cap earnings
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), Tecsys Inc. (TCS-T), Badger Infrastructure Solutions Ltd. (BDGI-T), Kits Eyecare Ltd. (KITS-T), Savaria Corp. (SIS-T)
March 6: Ayr Wellness Inc. (AYA-A-CN), TerrAscend Corp. (TSND-T), Major Drilling Group International (MDI-T), Savaria Corp. (SIS-T), Martinrea International Inc. (MRE-T)
March 7: Total Energy Services Inc. (TOT-T), MDA Space Ltd. (MDA-T), Canfor Corp. (CFP-T), Canfor Pulp Products Inc. (CFX-T)
March 10: Nexus Industrial REIT (NXR-UN-T), Pollard Banknote Ltd. (PBL-T), Frontera Energy Corp (FEC-T)
March 11: Dorel Industries Inc. (DII-B-T), Transcontinental Inc. (TCL-A-T, TCL-B-T)
March 12: Propel Holdings Inc. (PRL-T), Algoma Steel Group Inc. (ASTL-T)
March 13: NFI Group Inc. (NFI-T); Bird Construction Inc. (BDT-T); Ballard Power Systems (BLDP-T), Calfrac Well Services Ltd. (CFW-T), Medical Facilities Corp. (DR-T), Haivision Systems Inc. (HAI-T), Guru Organic Energy Corp. (GURU-T)
March 17: Information Services Corporation (ISC-T)
March 18: Neo Performance Materials Inc. (NEO-T), SNDL Inc. (SNDL-Q)
March 19: Gold Royalty Corp. (GROY-A), Charlotte’s Web Holdings Inc. (CWEB-T), AutoCanada Inc. (ACQ-T)