A look at some small-cap stocks making news - or about to.
Canada’s S&P/TSX Small Cap Index (TXTW-I) is up by about 40 per cent over the past 52 weeks. It hit a record 1,496.55 on June 2.
The Russell 2000 in the U.S. is up about 20 per cent over the past 52 weeks and reached a high of 3,069.71 on Aug. 14.
Small-cap summary:
Roots Corp. (ROOT-T), the Canadian retailer about to go private, announced lower sales and a wider loss in its second quarter versus a year earlier.
Before markets opened on Friday, the retailer reported sales of $49.5-million for the quarter ended Aug. 1, down from $50.8-million a year earlier.
Adjusted EBITDA came in at a loss of $1.6-million, as compared to a loss of $2.1-million a year ago.
Its net loss totaled $6-million or 15 cents per share, as compared to a loss of $4.4-million or 11 cents last year. Its adjusted loss was $3.2-million or 8 cents versus a loss of $3.8-million or 9 cents last year.
Last month, Roots announced it has agreed to a go-private transaction led by Marquee Brands for $4.10 per share. If approved, the transaction is expected to close in the fourth quarter. The shareholder vote is scheduled for Oct. 13.
Related: Roots’ New York-based suitor lays out global plans for the Canadian retailer
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Tecsys Inc. (TCS-T) shares soared in early Friday trading after the company reported first-quarter results that beat expectations and increased its guidance for fiscal 2027.
After markets closed on Thursday, the Montreal-based software company reported revenue of $50-million for the quarter ended July 31, up from $46-million a year ago. The result surpassed expectations of $47.7-million, according to S&P Capital IQ.
Profit of $3.1-million or 21 cents per share was up from $762,000 or 5 cents a year earlier and beat expectations of 13 cents.
Adjusted EBITDA of $6.9-million was up from $3.2-million a year ago and ahead of expectations of $5-million.
The company also said its revenue growth would be in the range of 5 to 8 per cent for the fiscal year, up from 2 to 4 per cent previously forecast.
“This is a very strong start to F2027 for Tecsys and, in our view, directly reinforces the thesis we laid out in our recent initiation,” Canaccord Genuity analyst Amr Ezzat wrote in a note. He has a “buy” and $46 target on the stock.
“The quarter addressed the two questions at the centre of the Tecsys debate: whether health care demand remains intact and whether earnings leverage can emerge before a more meaningful re-acceleration in consolidated revenue.”
Stifel analyst Suthan Sukumar described the results as “positive” in a note.
“TCS reported revenues and EBITDA ahead of our/Street expectations, with the F27 guide raised across all metrics,” he wrote, noting the SaaS revenue growth that was more “modest” on a constant-currency basis.
“We see this momentum as encouraging, but look for more sustained bookings/ARR acceleration against a mixed US healthcare backdrop to grow more constructive.”
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Enghouse Systems Ltd. (ENGH-T) reported mixed results for its third quarter ended July 31.
After markets closed on Thursday, the Markham, Ont.-based software company reported revenue of $117.6-million for the quarter compared to $125.6-million a year earlier. The result missed expectations of $118.1-million, according to S&P Capital IQ.
Net income was $15.4-million or 28 cents per share compared to $17.2-million or 31 cents last year. The result was below expectations of 32 cents for the most recent quarter.
Adjusted EBITDA was $30.8-million, ahead of expectations of $29.3-million and compared to $32.3-million a year earlier.
TD analyst David Kwan described the results as “slightly positive for sentiment” in a note.
“ENGH is by no means out of the woods, but we think the in-line revenue that grew q/q for the first time in a year and Adj. EBITDA beat could help reverse some of the negative sentiment that has been an overhang on the stock,” he wrote. “A challenging demand and M&A environment is likely to remain a key headwind to (organic) growth but ENGH continues to adjust its cost structure to help preserve margins/FCF.”
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North American Construction Group Ltd. (NOA-T) announced the appointment of Brad Rogers as president and CEO, effective Dec. 1.
“This appointment completes a global search process that took place over several months and involved a rigorous assessment of several highly qualified internal and external candidates, with the invaluable support of a leading executive recruitment firm,” the company stated in a release after markets closed on Thursday.
Mr. Rogers has more than 30 years’ experience across mining, mining services, industrial services, engineering, infrastructure development and corporate finance. Since August, 2022, he has served as CEO and managing director of Jupiter Mines, an Australian-listed mining company.
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Groupe Dynamite Inc. (GRDG-T) shares were volatile in Thursday trading after the Montreal-based retailer reported second-quarter results that one analyst described as “slightly positive.”
Before markets opened on Thursday, the company behind the Dynamite and Garage brand names reported revenue of $423.6-million for its second quarter ended Aug. 1, up 30 per cent from a year ago. The result beat expectations of $400.6-million.
Same-store sales (SSS) growth came in at 10.3 per cent versus 28.6 per cent last year.
Adjusted EBITDA increased by 56 per cent to $187.9-million and beat expectations of $163.5-million.
Net earnings of $113.4-million or $1 per share compared to $63.9-million or 56 cents last year. Adjusted earnings of 96 cents beat expectations of 80 cents.
RBC analyst Irene Nattel described the results as “modestly positive” and cited a “modest upward revision to guidance” that supports her “outperform” (buy) rating.
“GRGD delivered another strong quarter, with Q2 KPIs/results underscoring strong execution of GRGD strategy and brand heat,” she wrote. “As expected/telegraphed, Q2 saw a deceleration in SSS from Q1 +22.6% to 10.3%/12.3% constant currency, total revenue growth 30% Y/Y vs forecast/consensus +22% despite decelerating SSS.”
TD analyst Brian Morrison lowered his target price to $80 from $85 after the earnings, citing macro concerns, and maintained his “buy” recommendation.
“Q2/F26 was strong, beating all key metrics/raising its F2026 outlook. Despite this, investor focus seems overwhelmed by the broader macro backdrop/rising U.S. yields and potential future impact upon consumer resiliency, leading to industry multiple compression,” he wrote.
National Bank analyst Vishal Shreedhar maintained his “outperform” (buy) rating and increased his target to $93 from $91.
“We maintain a favourable disposition on GRGD; investment in GRGD is differentiated by strong financial metrics, with an EBITDA margin and ROIC that are the highest in our coverage universe,” he wrote.
BMO analyst Stephen MacLeod, who has an “outperform” (buy) and $83 target on the stock, said he continues to see value in the company’s position “as a luxury-inspired, affordable indulgence; supply chain flexibility; ability to chase in-season; real estate strategy; and strong brand heat.”
Added Mr. MacLeod: “We believe Groupe Dynamite is well-positioned in the North American women’s apparel market, with several drivers supporting high-teens-plus adjusted EBITDA growth.”
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Transat A.T. Inc. (TRZ-T) shares fell on Thursday after the company reported third-quarter results that missed expectations.
Before markets opened on Thursday, the Montreal-based company behind Air Transat reported revenues of $792.7-million for its third quarter ended July 31, up 3 per cent from $766.3-million last year. The expectation was for revenue of $805.6-million, according to S&P Capital IQ estimates.
Its net loss of $106.6-million or $2.60 a share compared with a profit of $399.8-million or $9.97 a share in the same period a year ago, which included a one-time $345.1 million gain on long-term debt extinguishment. Adjusted EPS of $2.18 was below expectations of $1.62 and compared to 28 cents a year earlier.
The company said load factors for the fourth quarter are 0.6 percentage points higher to date than on the same date in fiscal 2025, while airline unit revenues, expressed as yield, remain broadly in line with last year. It also expects a 2-per-cent increase in capacity, measured in available seat-miles, compared to 2025.
Related: Transat reports quarterly loss on soaring fuel costs
TD analyst Tim James lowered his price target to $2 from $2.25 and maintained his “hold” rating.
“Exposure to more price-sensitive international leisure travelers, narrow margins and high leverage continue to drive volatile results,” he wrote. “In the current environment of competition limiting yield expansion and higher jet fuel prices, we believe it is appropriate to wait for a better economic/industry backdrop that provides better visibility on long-term earnings potential before considering Transat.”
National Bank analyst Cameron Doerksen maintained his “underperform” (sell) rating and lowered his target to $1.50 from $2 after the earnings.
“Although any near-term liquidity concerns have been addressed by the new government-backed credit facility, we remain surprised that Transat has been unable to pass on much of the higher jet fuel costs through higher airfares, especially given that its main Canadian competitor and most other global airlines have had much greater success in raising fares,” he wrote. “With jet fuel prices significantly higher y/y, we expect ongoing pressure on earnings and cash flows in the coming quarters.”
CIBC analyst Krista Friesen maintained her “underperformer” (sell) rating and $1.75 price target after the earnings.
“Government financing continues to play an important role in TRZ’s liquidity, with the company now having fully drawn the $150 million LASR [Liquidity Assistance for Scheduled Airlines and Resellers] facility and the federal government making a further $250 million of funding available,” she wrote. “In our view, the current environment highlights not only the importance of the support but also the limited financial flexibility TRZ has when operating conditions deteriorate. Based on the current forward fuel curve, management believes its available liquidity is sufficient, although it acknowledged that additional solutions could be required should fuel prices remain elevated.”
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D2L Inc. (DTOL-T) shares dropped on Thursday after the company reported mixed results for its latest quarter and lowered its revenue guidance for the fiscal year.
After markets closed on Wednesday, the Toronto-based learning technology company reported revenue of US$55.6-million up from US$54.8-million a year earlier. The result missed expectations of US$56.2-million, according to S&P Capital IQ estimates.
Its loss of US$3-million or 6 cents US per share compared to a profit of US$2.7-million or 5 cents US a year ago. The expectation was for a profit of 4 cents US per share.
Adjusted EBITDA was US$6.5-million versus US$7.5-million in the prior-year period.
The company also said fiscal 2027 revenue is expected to be in the range of US$228-million to US$231-million, or growth of 5 to 6 per cent over fiscal 2026. That was down from previously issued guidance of US$231-million to US$234-million. Adjusted EBITDA was unchanged in the range of US$33-million to US$35-million.
The company cited softer demand within its advisory professional services “as well as the timing impact of a delayed go-live of a new customer deployment and the corresponding impact to subscription and support revenue in the current fiscal year” for the lower revenue estimate.
“These pressures on revenue in the current fiscal year are being offset by continued optimization of cost of goods sold and operating efficiency, allowing the company to maintain its Adjusted EBITDA guidance,” it stated.
CIBC analyst Erin Kyle lowered her target to “neutral” (hold) from “outperformer” (buy) and lowered her price target to $11 from $16 after the earnings.
“The U.S. K-12 customer loss this quarter was larger than we had modelled and contributed to growth below our expectations,” she wrote. “As a result of the churn, we estimate subscription growth will remain in the mid-single-digit range over the next several quarters as D2L laps prior periods that included the lost revenue.”
Added Ms. Kyle: “While we do not anticipate additional K-12 churn from here, core ARR [annual recurring revenue] growth of 10% Y/Y also decelerated. Absent a reacceleration in core ARR growth, we expect F2028 growth will fall below management’s target range of 10%-15% and model 8% Y/Y revenue growth... While we continue to see potential upside from strength in corporate and international markets as well as M&A, we prefer to move to the sidelines until growth reaccelerates. We believe shares are unlikely to re-rate meaningfully higher until subscription growth returns to the 10%+ range.”
BMO analyst Thanos Moschopoulos maintained his “market perform” (hold) on the company after the results.
“We see limited downside risk to the stock given its depressed valuation, high recurring revenue mix, ongoing opex discipline and strong competitive position in higher-ed,” he wrote. “We remain on the sidelines, however, as we prefer other stocks in our coverage universe.”
Stifel analyst Suthan Sukumar described the results as “slightly negative” in a note.
“D2L reported revenue modestly below expectations and trimmed its F27 revenue guide by ~1% at the midpoint, though the EBITDA guide and F28 outlook remain unchanged,” he wrote. “An anticipated tranche of US K-12 churn slowed reported ARR growth to 5% y/y (vs. 9% LQ) - the key driver for the stock, in our view - with churn expected to normalize in FQ3. Encouragingly, cc ARR growth ex-K12 held steady q/q at ~11% y/y, pointing to sustained momentum across international/corporate markets.”
Added Mr. Sukumar: “Lower revenue guide primarily reflects softer advisory professional services demand and timing of a delayed customer go-live, leaving implied H2 ramp the key item to watch.”
In a note, TD analyst John Shao said conversations with D2L management addressed his previous concerns, “and we now view FQ2 as marking trough growth, with K-12 churn, deployment delays, and database migration costs set to roll off in H2.”
Added Mr. Shao: “The reiterated FY28 model is supported by double-digit ARR growth, product leadership, and potential M&A. Investor focus now shifts to H2 execution and proving a durable recovery path.”
National Bank analyst Doug Taylor maintained his “outperform” rating and $15 target despite the lower forecast “given the model roll and ongoing cash generation (and buybacks), still reflecting a modest 9.0x NTM+1 EBITDA (from 9.5x). We think this is unlocked as overall growth rates normalize after a noisy FY27.”
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Haivision Systems Inc. (HAI-T) shares fell on Thursday after the company reported mixed results for its latest quarter.
After markets closed on Wednesday, the Montreal-based video networking company reported revenue of $34.5-million for the third quarter ended July 31, down 1.4 per cent from a year earlier. The result was roughly in line with expectations of $34.2-million, according to S&P Capital IQ estimates.
Its net loss of $2.1-million or 8 cents per share compared to a profit of $179,000 or a penny per share last year. The expectation was for a loss of 3 cents.
Adjusted EBITDA of $1.5-million fell from $3.5-million last year and was below expectations of $2.2-million.
“Haivision delivered a soft but sequentially improved FQ3,” Canaccord Genuity analyst Robert Young wrote in a note. “The revenue headwinds identified last quarter persisted, including broadcast budget scrutiny, enterprise approval delays, and defence procurement timing delays.”
He said gross margin improved modestly quarter over quarter to 69.4 per cent “but remained below last year, reflecting an unfavourable defence mix and component costs rising ahead of pricing adjustments, with tariffs adding uncertainty to the pace of recovery.”
Added Mr. Young: “Nevertheless, management emphasized that customer engagement remains healthy and that the company has a robust pipeline, including several larger strategic opportunities. We expect management to provide further colour on the outlook and pipeline conversion through the remainder of F26, as well as on the potential impact of US tariffs and Haivision’s mitigation efforts.”
Acumen Capital analyst Nick Corcoran moved to a “speculative buy” from “buy” and lowered his target price to $5 from $6 citing revised estimates and outlook.
“HAI’s revised guidance and outlook reflect macro headwinds that continue to intensify,” he wrote, adding that the company revised its fiscal 2026 guidance with revenue at the low end of the previous range of $140-million to $142-million and tariffs impacting gross margins in August.
“End market demand remains strong with no program cancellations to date (including US Navy contract). While the long-term outlook is positive, there is significant near-term uncertainty. Tariffs apply to the Makito line of products (~30% of sales) with an estimated impact of 300 bps. Management has moved to fulfill orders in the US to reduce the tariff exposure,” he wrote.
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The North West Company Inc. (NWC-T) reported second-quarter earnings that beat expectations and raised its dividend.
After markets closed on Tuesday, the Winnipeg-based retailer behind brands such as Northern, NorthMart, Giant Tiger and Cost-U-Less reported sales of $682-million for the quarter ended July 31, up from $647-million a year ago.
The result beat expectations of $661-million, according to S&P Capital IQ estimates.
Same-store sales increased 6.7 per cent compared to a 1.1 per cent decrease in the second quarter.
Net earnings increased 1.9 per cent to $38.3-million compared to net earnings of $37.6-million last year. On a per-share basis, earnings came in at 76 cents versus 74 cents last year. Adjusted EPS of 84 cents beat expectations of 82 cents.
The company also hiked its quarterly dividend to 42 cents per share, up 2.4 per cent.
TD analyst Cheryl Zhang described the results as “strong” in a note.
She said the shares were “driven by early signs of the long-awaited settlement payment ramp-up, resilient margins despite fuel inflation, and a modest dividend raise.”
Added Ms. Zhang: “Against macro uncertainties, we continue to view NWC as a unique consumer investment given its defensive business model, attractive earnings growth outlook, and compelling valuation.”
CIBC analyst Ty Collin said in a note that the second-quarter results showed a recovery in growth and effective management of volatile supply chain costs.
“We see a constructive setup for the balance of F2026 as NWC cycles soft comps and benefits from a recent uptick in child welfare settlement payments, which we expect will be a multi-year tailwind,” he wrote. “We believe that NWC will also benefit over a longer time horizon from increased investments in the North, stemming from additional settlement agreements with First Nations communities and major defence/infrastructure projects.”
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Transcontinental Inc. (TCL-A-T) reported mixed results for its third quarter.
Before markets opened on Wednesday, the Montreal-based retail marketing services provider, commercial printing and specialty media company reported revenue of $306-million for its third quarter ended July 26, up from $294.9-million a year earlier.
The result beat expectations of $295.4-million, according to S&P Capital IQ estimates.
Adjusted earnings were $27.1-million or 32 cents per share, up from $22.2-million or 27 cents a year ago. The result fell short of expectations of 38 cents for the quarter.
“After a challenging start to fiscal 2026, TCL’s Q3 earnings inflected higher both y/y [year over year] and q/q [quarter over quarter], supported by acquisitions and cost reduction,” TD analyst Sean Steuart said in a note. “Adjusted EBITDA was in line with expectations, while adjusted EPS fell short due primarily to a higher-than-expected effective tax rate.”
He said the company has strong free cash flow, “which we expect will support bolt-on acquisitions, discretionary capex and deleveraging.”
CIBC analyst Hamir Patel reiterated his “outperformer” rating on the stock and $7 price target after the earnings report.
“While components of the remaining legacy printing business continue to face overall declining market demand, they still generate strong FCF [free cash flow],” he wrote.
“At the same time, expected growth in ISM (with recent M&A) and mix improvement through the recent roll-out of ‘raddar’ across Canada should support stable earnings going forward. Additionally, the company should see cost improvements materialize further over the next 18 months.”
He also expects the company to continue reducing debt over the coming year, citing strong free-cash flow generation.
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Tamarack Valley Energy Ltd. (TVE-T) announced on Tuesday that it’s merging with Headwater Exploration Inc. (HWX-T) in a $10-billion all-stock deal that they say will create an oil-producing heavyweight in the Clearwater region of northern Alberta.
“The transaction brings together two leading Clearwater producers, each characterized by low-cost, high-margin production, low corporate decline rates, modest reinvestment requirements and low corporate break-even oil prices,” the companies said in a news release Tuesday.
“The combined business will benefit from decades of Clearwater drilling and waterflood inventory, meaningful operating and capital synergies and greater scale across the play.”
Under the proposed deal, Headwater shareholders will receive one Tamarack share for each Headwater common share they hold. Tamarack shareholders will own 66.5 per cent of the combined company, while Headwater shareholders will own 33.5 per cent.
The deal requires approval by both companies’ shareholders.
Related: Oil patch M&A boom signals confidence in Canada’s gas export superpower strategy
Upcoming small-cap earnings:
Sept. 14: High Tide Inc. HITI-X
Sept. 17: Reitmans (Canada) Ltd. (RET-X)
Sept 23: AGF Management Ltd. (AGF-B-T)
Sept. 24: Vecima Networks Inc. (VCM-T), BlackBerry Ltd. (BB-T)
- with files from The Canadian Press