A weekly look at some small-cap stocks making news - or about to.
Canada’s S&P/TSX Small Cap Index TXTW-I is up about 20 per cent over the past 52 weeks, as of Thursday’s close. The index reached a record high of 970.58 on Tuesday, Aug. 19. The Russell 2000 in the U.S. is up about 5 per cent over the past 52 weeks.
Small-cap spotlight
EQB Inc. (EQB-T) shareholders will be looking for updates on the bank’s loan-loss reserves when it reports fiscal third-quarter earnings after markets close on Wednesday (Aug. 27).
It will be the first quarterly report after former EQB CEO Andrew Moor died unexpectedly in June. Chadwick Westlake, a former chief financial officer of the digital challenger bank for 4.5 years before he left in March to be CFO at Open Text Corp., will take over on Aug. 25. Interim CEO Marlene Lenarduzzi has led the bank in the interim and will return to her role as chief risk officer.
EQB, the company behind Equitable Bank, reported much higher-than-expected impaired provisions for credit losses (PCLs) in its second quarter, which led some analysts to cut their price targets at the time.
In the second-quarter analyst call on May 29, Ms. Lenarduzzi said the higher PCLs were driven by a weaker economic outlook.
“If market uncertainty were to subside, we may see improvement in the second half of the fiscal, aided by today’s lower interest rate environment and the investments we’ve made in risk management disciplines,” she said, according to a transcript of the call.
“We are confident in the overall quality of our lending portfolios in the level of reserves we’ve taken and expect our loan loss experience will return to more normal levels over time in keeping with our long-standing position as a credit performance leader among all Canadian banks.”
Raymond James analyst Stephen Boland updated his estimates ahead of the third quarter report, after a recent update call with EBQ management.
“We are raising our PCL forecasts to account for ongoing weakness in the Canadian housing market, as declining home prices continue to pressure EQB’s 2020/2021 loan vintages,” Mr. Boland wrote in an Aug. 13 note. He has an “outperform” rating (equivalent of a buy) and $108 target on the stock.
For the third quarter, he expects PCLs to remain at a similar level to the second quarter, “though we still expect credit losses to gradually normalize as we exit FY2025 and into FY2026.”
Outside PCLs, the analyst also moderated his outlook for loan growth, “given the persistent weakness in home sales, while we expect NIM [net interest margin] to decline sequentially from 2Q25 due to the lower number of earning days this quarter.“
He also pointed to higher leasing expenses related to EQB’s relocation to a new head office.
Mr. Boland will also be watching for management’s update on the company’s future strategy under Mr. Westlake, but expects it to be largely unchanged. He believes much of the discussion will centre around general credit conditions and the near-term outlook for PCLs.
“Although we forecast elevated PCLs near-term, we expect EPS growth to resume next year as EQB benefits from an improving credit environment and a gradual shift toward a more normalized PCL range of [about] 10–15 basis points,“ he wrote.
National Bank Financial analyst Gabriel Dechaine also reduced his forecasts for EQB ahead of next week’s earnings report to account for weaker NIM, higher expenses and “another quarter of elevated PCLs.”
Mr. Dechaine, who has a “sector perform” (hold) and $104 target, wrote in an Aug. 14 note that mortgage growth is still “sluggish.”
“With ongoing challenges in the domestic real-estate market (e.g. MLS Home Price Index flat over May and June) along with a deterioration in economic indicators, we expect another quarter of elevated PCLs at EQB,” he wrote. “We could also see higher losses in EQB’s equipment finance portfolio, which includes the long-haul trucking lease business that has generated 65 per cent of reported impaired PCLs over the past year.
The bank is expected to report earnings of $2.50 per share and revenue of $320.2-million for the quarter ended July 31, according to S&P Capital IQ estimates. For the same quarter last year, revenue was $327.2-million and earnings came in at $2.84 per share.
In the past 52 weeks, the stock has traded between a high of $114.22 and a low of $85.14.
Related:
Equitable Bank names Chadwick Westlake as CEO
Equitable Bank CEO Andrew Moor dies at 65
Small-cap summary
Other small caps making news this week:
Kraken Robotics Inc. (PNG-X) shares closed up 3.5 per cent on Thursday after the marine technology company reported second-quarter earnings that beat expectations.
Before markets opened on Thursday, the company said revenue rose 16 per cent to $26.4-million, compared to $22.8-million in the prior year and ahead of expectations of $24.8-million.
“The increase was driven by strong growth in our subsea battery and service businesses and the acquisition of 3D at Depth Inc., offset by lower sonar revenue,” the company stated.
Adjusted EBITDA for the quarter of $4.7-million, which was down from $5.4-million a year ago, but ahead of expectations of $4.3-million.
Its net loss in the quarter was $700,000 or nil per share versus net income of $2.6-million or a penny per share last year.
The company said its 2025 financial guidance remains unchanged from its last earnings report.
National Bank analyst John Shao, who has an “outperform” (buy) and $4 target on the stock, described the results as “decent.”
Beyond the quarterly numbers, he noted that management’s comments on the macro environment and deal pipeline continue to be “robust.”
“In our view, while the revenue lumpiness cannot be eliminated, what’s driving the stock’s appreciation is not a quarter’s beat or miss, but rather the increased occurrence of new contract awards. On that front, we remain optimistic based on Kraken’s competitiveness, strong market tailwinds, and a growing number of RFPs and demos to be converted in the future,” he wrote.
In the past 52 weeks, the stock has traded between a high of $3.92 and a low of $1.38.
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Clairvest Group Inc. (CVG-T) shares sank 6 per cent on Thursday after the company announced a “material adverse regulatory development” related to one of its companies, Head Digital Works, a skill-based gaming platform in India.
The company stated that India’s parliament passed new online gaming legislation on Aug. 21, banning real-money gaming and making it illegal for Head Digital Works to conduct its business in India.
“The company intends to pursue all of its legal rights to challenge the validity of the legislation, including seeking injunctive relief while court challenges are in process,” Clairvest stated.
CVG and Clairvest Equity Partners V invested in the company in 2017 and said its investment represents 9.6 per cent of its book value on a pre-tax, pre-carry basis as at June 30.
In the past 52 weeks, the stock has traded between a high of $78.27 and a low of $66.
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Osisko Metals Inc. (OM-X) closed up 5 per cent on Thursday after the company announced that it will be uplisting to the Toronto Stock Exchange effective at market open on today.
“Graduating to the TSX represents a significant milestone that is expected to enhance the company’s visibility and improve access to a broader investor base,” it stated in a release.
In the past 52 weeks, the stock has traded between a high of 55 cents and a low of 20 cents.
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Goodfood Market Corp. (FOOD-T) shares rose this week after the company announced its CEO and co-founder Jonathan Ferrari was stepping down, effective immediately.
Before markets opened on Wednesday, the company said in a statement that Mr. Ferrari will continue to serve as a director on the board.
President, co-founder and chief operating officer Neil Cuggy will continue in his executive functions, the company stated, while the board “launches a formal operating review to enhance its long-term strategy.” It said the review “is aimed at securing a sustainable competitive edge and reinforcing the company’s business model to navigate its next critical phase.”
Selim Bassoul, executive chairman of Six Flags Entertainment Corp., has been appointed chair of the board, effective immediately, the company stated.
Goodfood shares have fallen significantly in recent years, after a run-up to more than $13 per share during the pandemic, when people trapped at home during lockdowns relied more on meal-kit delivery companies to eat.
The stock is down more than 50 per cent so far this year. It has traded between a high of 54 cents and a low of 14 cents over the past year.
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Canaccord Genuity Group Inc. (CF-T) announced an agreement to acquire Australian financial services firm Wilsons Advisory.
“The acquisition supports the company’s strategy of increasing the scale of its wealth management operations and enhancing its capital markets capabilities in a key growth market,” Canaccord stated in a release before markets opened on Wednesday.
Wilsons Advisory was founded in 1895 and has wealth management and capital markets operations. For the year ended June 30, Wilsons had assets of $16.7-billion in Australian dollars.
The deal is subject to regulatory approval and customary closing conditions. Terms were not disclosed.
In the past 52 weeks, Canaccord’s stock has traded between a high of $11.50 and a low of $7.45.
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High Tide Inc. (HITI-X) shares soared this week after the cannabis company reported guidance estimates for its third fiscal quarter ended July 31 that were ahead of expectations.
Before markets opened on Wednesday, the company said revenue is expected to increase by 12 to 14 per cent year-over-year, which would be the fastest pace since the fourth quarter of 2023, according to Ventum Capital Markets analyst Andrew Semple.
The company also indicated adjusted EBITDA of $9.6-million to $10.6-million, the mid-point of which is about 20 per cent above consensus, Mr. Semple wrote in a note. Also, same-store-sales growth is expected to be 7.4 per cent, the fastest in two years, he noted.
“We are pleased with this new earnings guidance, which shows both sales and earnings expanding faster than we previously expected,” Mr. Semple wrote. “We believe these results bode well for the company’s core Canadian cannabis retail operations.”
He reiterated his “buy” recommendation and $8.50 price target. “We have maintained our longer-term estimates while we await more details from the Company’s full earnings release on Sept. 15.”
In the past 52 weeks, the stock has traded between a high of $5.08 and a low of $2.37.
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Westshore Terminals Investment Corp. (WTE-T) announced a 10-week closure at one of its terminals after a fire on Saturday, which will reduce its annual cargo volumes.
After markets closed on Monday, the company said there were no injuries or significant structural damage from the fire, but that a closure is needed to make repairs to the mechanical and electrical systems.
Westshore said it expects throughput volumes for 2025 to be approximately 24 million to 24.5 million tonnes, a reduction from the previously disclosed estimate of approximately 26 million tonnes.
In the past 52 weeks, the stock has traded between a high of $28.88 and a low of $21.60.
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Information Services Corp. (ISC-T) announced this week an agreement to deliver a new digital records system to Ontario’s Ministry of Environment, Conservation and Parks. The agreement has an initial nine-year term, with extension options.
“The Ontario government receives over 9,000 property-related information requests each year to support land transactions worth more than $40 billion,” said Todd McCarthy, Minister of the Environment, Conservation and Parks. “With ISC’s support, the move to a secure, self-service portal will be a game-changer for builders — reducing wait times from around 30 days to as little as 3 — and giving the industry the tools it needs to deliver housing faster and keep our economy strong.”
In the past 52 weeks, the stock has traded between a high of $33.16 and a low of $24.02.
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Bragg Gaming Group Inc. (BRAG-T) shares sank this week after the company announced it was hit by a cybersecurity incident early Saturday morning.
In a release late Sunday, the content and technology provider to the online gaming industry, stated that it has taken “immediate steps to mitigate any potential impact” and brought in extra independent cybersecurity experts to help it deal with the incident.
“Based on preliminary investigations, the company believes that the data breach was limited to Bragg’s internal computer environment,” it stated in the release. “At the present time, there is no indication that any personal information was affected.”
It also said the breach “has had no impact on the ability of the company to continue its operations, nor has it been restricted from accessing any data that has been subject to the breach.”
In the past 52 weeks, the stock has traded between a high of $8.68 and a low of $3.81.
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Upcoming small-cap earnings:
Aug. 27: EQB Inc. (EQB-T)
Aug. 29: Laurentian Bank (LB-T)
Sept. 4: VersaBank (VBNK-T), Transcontinental Inc. (TCL-A-T)
Sept. 10: D2L Inc. (DTOL-T), Haivision Systems Inc. (HAI-T),
Sept. 11: Haivision Systems Inc. (HAI-T)
Sept. 15: High Tide Inc. (HITI-X)
Sept. 24: AGF Management Ltd. (AGF-B-T)