A weekly look at some small-cap stocks making news - or about to.
As of market close on Thursday, March 13, Canada’s S&P/TSX SmallCap Index was up about 8.5 per cent over the past 12 months. The Russell 2000 in the U.S. was down nearly 4 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.
NFI Group Inc. (NFI-T) shares jumped at the open today after the Winnipeg-based bus maker said it swung to a profit in the fourth quarter and revenues rose. The company also said it had a record backlog at the end of last year.
NFI reported net earnings of US$18.6-million or 16 cents per share compared to a loss of US$2.3-million or 2 cents US a year earlier.
Adjusted earnings came in at US$13.9-million or 12 cents US per share versus a loss of US$5.9-million or 5 cents US per share a year earlier. The expectation was for adjusted earnings of 4 cents US per share, according to S&P Capital IQ.
NFI reported revenue of US$837-million, an increase of 5.1 per cent year-over-year but below expectations of US$884.6-million.
The company also updated its 2025 revenue guidance to a range of US$3.8-billion to US$4.2-billion compared to a previous target of about US$4-billion. Adjusted EBITDA guidance is now US$320-million to US$360-million compared to more than US$350-million. The company also updated its guidance for zero-emission buses to 35 to 40 per cent of manufacturing sales compared to about 40 per cent.
The company said the outlook doesn’t include the impacts of U.S. and Canadian tariffs. It said a “significant portion” of increased costs resulting from U.S. and Canadian tariffs can be passed on to end customers through contractual obligations and through general price increases. “This is likely to require negotiation with customers and such contractual protections may not cover all costs or be effective for extended periods,” the company stated, adding that it may be more difficult to pass on the impacts of increased input costs in private coach markets since they don’t have the same contract terms.
“NFI anticipates that tariffs may lead to a reduction in private coach demand (and associated production) within North America,” it stated, adding there may be near-term cash flow implications “due to the payment timing of tariffs and there may also be a decrease in order sizes due to higher prices.”
“Market demand remained strong across North American market segments helping drive our backlog to record levels of nearly $13-billion. This provides us with strong visibility for growth as we have significant firm orders for 2025 and 2026, and options extending to 2030,” CEO Paul Soubry stated in a release, adding the company is monitoring policy and trade issues that may impact its industry.
“While these broader conditions create risks, our strategic focus on a propulsion agnostic product offering, localized manufacturing, and improved contract structures has increased our ability to respond quickly to changing market dynamics,” Mr. Soubry stated.
National Bank of Canada analyst Cameron Doerksen said in a late Thursday note that the fourth-quarter results were slightly above his firm’s and consensus forecasts.
The analyst kept his “outperform” recommendation on the stock and $19 price target, saying the positive view is based on the backlog and better pricing and as well more favourable competitive conditions in the U.S. market.
“Risks remain including tariffs and potential changes to U.S. transit funding (although we expect the current backlog is safe), but with the stock trading at 6.1x 2025 EV/EBITDA at the mid-point of guidance (the low end of the historical range for the stock), we like the risk-reward balance,” he wrote.
BMO Capital Markets analyst John Gibson kept his “market perform” (similar to hold) recommendation on the stock and lowered his target to $13 from $14.”While NFI’s backlog remains very robust, the company continues to face supplier-related seat issues and now, potential tariff impacts. Overall, we believe the competitive landscape shapes up well for NFI, although these near-term hurdles keep us neutral on the shares,” he wrote in a note late Thursday.
NFI Group shares are down 23 per cent so far this year, as of Thursday’s close.
In the past 52 weeks, the stock has traded between a low of $9.91 in mid-February and a high of $19.55 in August.
Small-cap summary
Other small caps making news this week:
Calfrac Well Services Ltd. (CFW-T) shares closed down 4 per cent on Thursday after the company reported fourth-quarter earnings below expectations.
Before markets opened on Thursday, Calfrac reported revenue of $381.2-million, a decrease of 10 per cent from the same quarter in 2023. The company said the drop was “primarily due to lower activity and pricing in North America, offset partially by activity with its new offshore coiled tubing unit in Argentina.” The result was below expectations of $390.4-million.
Calfrac reported a net loss of $6.4-million or 7 cents per share compared to net income of $13.2-million or 15 cents per share in the same quarter in 2023. The result was below expectations of a loss of 2 cents per share.
The stock has traded between a high of $4.85 and a low of $3.45 in the past 52 weeks.
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Medical Facilities Corp. (DR-T) shares closed down 9 per cent on Thursday after the Toronto-based company reported lower-than-expected revenue for its fourth quarter.
Before markets opened on Thursday, the company that owns surgical facilities in the U.S. reported revenue of US$91.1-million, down 1 per cent from $92.1-million a year earlier. The result was below expectations of US$109-million, according to S&P Capital IQ.
Net income of US$36-million or 59 cents US per share compared to net income of US$14-million or 29 cents US a year earlier. The expectation was for earnings of 41 cents US per share.
The stock has traded between a high of $17.97 and a low of $9.60 on the Toronto Stock Exchange in the past 52 weeks.
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Ballard Power Systems (BLDP-T) shares closed up 3 per cent on Thursday after the Vancouver-based company said its order backlog grew. The increase came despite the company reporting a big drop in fourth-quarter revenue.
Before markets opened on Thursday, Ballard reported fourth-quarter revenue of US$24.5-million, down 48 per cent compared to US$46.8-million for the same quarter a year ago. The result was below expectations of US$28.6-million.
Its net loss was US$46.5-million or 16 cents US per share compared with a loss of US$48.9-million or 16 cents US a year earlier.
“2024 was a tough year for the hydrogen and fuel cell industry,” stated Ballard CEO Randy MacEwen in a release. “Amidst prolonged policy uncertainty, there was a multi-year push-out in the development of hydrogen projects and the deployment of fuel cell applications. With this backdrop, compounded by a difficult funding environment, an industry rationalization is underway.”
The company said its order backlog at the end of 2024 was US$173.5-million, an increase of 41 per cent compared to the end of the third quarter, which it said was driven by record order intake of US$75.4 million and deliveries of US$24.5 million.
Ballard stock has traded between a high of $4.58 and a low of $1.56 on the Toronto Stock Exchange in the past 52 weeks.
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Shares of Transat A.T. Inc. (TRZ-T), the company behind the Air Transat brand, fell 8 per cent on Thursday after the company reported a wider loss in its latest quarter.
Before markets opened on Thursday, the company reported a net loss of $122.5-million or $3.10 per share for its first quarter ended Jan. 31. That compared to a net loss of $61-million or $1.58 per share for the same period last year. Its adjusted net loss was $1.90 per share versus a loss of $1.97 a year ago.
Revenue of $829.5-million was up 5.6 per cent from $785.5-million in the same quarter last year. The result was ahead of expectations of $816.8-million, according to S&P Capital IQ.
Adjusted EBITDA was $20-million compared with negative adjusted EBITDA of $3.3-million a year ago.
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Bird Construction Inc. (BDT-T) shares sank 3 per cent on Thursday after the company reported results below expectations.
After markets closed on Wednesday, the company reported revenue of $936.7-million compared to $792.1-million in the prior-year quarter. The result was below expectations of $938.3-million.
Net income was $32.5-million or 59 cents per share compared to $23.9-million and 44 cents a year earlier. Adjusted earnings of 67 cents per share was in line with expectations and compared to 46 cents a year earlier.
BMO Capital Markets analyst John Gibson kept his “outperform” rating (similar to buy) but lowered his target price to $30 from $32, citing “some near-term macro uncertainty.”
The stock has traded between a high of $32.67 and a low of $17.89 in the past 52 weeks.
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Algoma Steel Group Inc. (ASTL-T) reported revenue of $590.3-million for its third quarter ended Dec. 30 compared to $615.4-million in the prior-year quarter. The expectation was for revenue of $582.3-million, according to S&P Capital IQ.
The company reported a net loss of $66.5-million or 61 cents compared to a net loss of $84.8-million or 78 cents in the prior-year quarter.
The company said in a release that U.S. tariffs are expected to have “a material and adverse impact” on its financial position, results of operations and liquidity. “However, an estimate of the financial impact cannot be made at this time,” it stated.
Algoma CEO Michael Garcia said the company has made aggressive cost cuts as it copes with the fallout of the ongoing trade war.
“The implementation of tariffs on Canadian steel and aluminum imports has introduced even more uncertainty into the North American steel market,” Mr. Garcia told analysts as the company reported its latest quarterly results.
“Given the deeply integrated North American supply chain, we believe rational dialogue will prevail between these two close allies, restoring normal steel trade between Canada and the U.S.”
The stock, which is down 35 per cent so far this year, has traded between a high of $16.83 and a low of $7.54 in the past 52 weeks.
The Globe’s Niall McGee this week wrote on how Algoma’s CEO hopes for a federal boost to deal with tariff pressures. Read the story here
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In a release after markets closed on Wednesday, Currency Exchange International Corp. (CXI-T) reported that its revenue increased by 10 per cent to US$19.9-million for the quarter ended Jan. 31 compared to US$18.1-million for the same quarter last year. The result beat expectations of US$18.4-million.
Net income was US$812,530 or 12 cents US per share compared to US$849,874 or 13 cents a year earlier. Adjusted net income of US$1.1-million or 17 cents US per share compared to US$849,874 or 13 cents US a year earlier.
“We view the [first quarter] results as positive given the solid growth in revenue and EBITDA from 2024 levels,” Acumen Capital analyst Jim Byrne said in a March 13 note. He has a “buy” and $30 target on the stock.
The stock is down 6 per cent so far this year and is trading near its 52-week low of $21. It’s 52-week high was $27.07.
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Blackline Safety Corp. (BLN-T) shares rose by as much as 12 per cent this week after the company reported record first-quarter revenue and overall results that beat expectations.
Before markets opened on Wednesday, the company reported revenue of $37.7-million, a 43-per-cent increase from the prior-year quarter. The result was ahead of expectations of $32.7-million, according to S&P Capital IQ.
“This growth was driven by a significant rise in product sales and recurring service revenues, bolstered by upselling and expanded service adoption,” the company stated.
It reported a net loss of $1.1-million or a penny per share, an improvement from a loss of $6-million or 8 cents a year earlier. The expectation was for a loss of 3 cents in the latest quarter.
Ventum Capital Markets analyst Amr Ezzat kept his “buy” rating and increased his target price to $8.25 per share from $7.75 post-earnings.
Canaccord Genuity analyst Doug Taylor, who has a “buy” on the stock, increased his target to $8.50 from $8 following the “impressive” first-quarter revenue and profit beat.
“We believe Blackline’s strong competitive positioning and differentiated product offering within the connected safety device market should allow the company to continue to take market share in any tariff scenario – this view underpins our ongoing positive thesis on the name,” he wrote in a March 12 note.
The stock is up 50 per cent over the past year and is trading near its 52-week high of $7.61.
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Dorel Industries Inc. (DII-B-T) shares are down about 25 per cent this week after the company reported a drop in fourth-quarter revenue and a wider loss compared to the year-ago period.
After markets closed on Tuesday, the company reported revenue of US$326.8-million for the quarter ended Dec. 30, down 6.8 per cent from US$350.7-million a year earlier. The expectation was for revenue of US$352-million, according to S&P Capital IQ.
Its net loss was US$73-million or US$2.24 per share compared to a loss of US$3.8-million or 12 cents US per share a year ago.
Dorel said the net loss for the most recent quarter includes restructuring costs of US$14.1-million and write-downs of deferred tax assets of US$36.5-million.
Its adjusted net loss was US$59.2-million or US$1.82 per share compared to adjusted net income of US$200,000 or 1 cent US per share a year earlier.
Dorel shares are down nearly 50 per cent over the past year and trading near their 52-week low of $2.79.
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After markets closed on Wednesday, fintech company Propel Holdings Inc. (PRL-T) reported that its fourth-quarter revenues increased by 35 per cent to US$129.3-million. The result was ahead of expectations of US$128.5-million, according to S&P Capital IQ.
Net income of US$11.6-million or 29 cents US per share compared to net income of US$8.5-million or 23 cents US per share. The result was below expectations of 31 cents US per share.
Raymond James analyst Stephen Boland kept his “outperform” recommendation but lowered his target price to $44 from $52.
In a March 13 note, he said the company’s stock has pulled back sharply in recent weeks, down about 40 per cent from its January high.
“With fundamentals still strong, we suspect much of the recent weakness can be attributed to growing concerns surrounding the health of the U.S. consumer and the possibility of a recession later this year,” he wrote. “While fundamentals remain solid, we have adjusted our estimates to reflect a lower revenue yield and moderately slower origination growth in 2025 and 2026. This reflects additional prudence in light of the volatile geopolitical situation in North America.”
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Transcontinental Inc. (TCL-A-T, TCL-B-T) shares are up 10 per cent this week after the printer and packaging company beat estimates for its latest quarter and announced a special dividend.
On Tuesday morning, the company reported net earnings of $55.6-million or 66 cents per share compared to $13.9-million or 16 cents a year earlier. Adjusted earnings of $41.5-million or 49 cents per share compared to $37.4-million or 43 cents a year earlier. The expectation was for adjusted earnings of 38 cents.
Revenues of $643-million were down from $680.4-million a year earlier and below expectations of $643-million, according to S&P Capital IQ.
The company declared a special $1 dividend alongside its regular dividend of 22.5 cents.
CIBC Capital Markets analyst Hamir Patel reiterated his “outperformer” rating (similar to buy) and $21 price target.
“[The company] has now beat estimates for six consecutive quarters, while simultaneously returning cash to shareholders (buybacks and recent special dividend),” Mr. Patel wrote. “At the same time, the company’s mix continues to improve, with packaging forecast to represent [about] 60 per cent of EBITDA in [fiscal] 2026 vs. [about] 57 per cent [in fiscal 2025].
The analyst also expects the company to reduce debt over the coming year.
National Bank Financial analyst Adam Shine maintained his “outperform” rating but lowered his target to $22 from $23.
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Pollard Banknote Ltd. (PBL-T) shares dropped by nearly 20 per cent this week after the company said it swung to a loss in the fourth quarter.
After markets closed on Monday, the Winnipeg-based company reported a net loss of $1.8-million or 6 cents per share versus a profit of $11.3-million or 41 cents a year earlier.
Adjusted EBITDA of $25.2-million was similar to $25.7-million earned in the fourth quarter of 2023. The expectation was for $31.7-million.
The company reported revenue of $140.3-million, up 3.5 per cent from the fourth quarter of 2023. The expectation was for revenue of $147.2-million, according to S&P Capital IQ.
Acumen Capital analyst Jim Byrne kept his “buy” recommendation but lowered his price target to $32 from $33 after the earnings.
“While the Q4 results fell short of expectations, we believe many of the issues faced will prove to be transitory,” he wrote.
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Frontera Energy Corp. (FEC-T) recorded a net loss of $29.4-million or 36 cents per share in the fourth quarter of 2024, compared with net income of $92-million or $1.08 per share in the fourth quarter of 2023.
The company said the the net loss for the fourth quarter included income tax expense of $33.4-million, finance expenses of $21.8-million, $8.9-million related to loss on risk management contracts, and foreign exchange loss of $1.8-million, partially offset by income from operations of $14.9-million and $13.2-million from share of income from associates.
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Enghouse Systems Ltd. (ENGH-T) said its revenue increased 2.9 per cent in the first quarter ended Jan. 31 to $124-million from $120.5-million a year earlier. The result was below expectations of $126-million, according to S&P Capital IQ.
Net income was $21.9-million or 40 cents per share compared to $18.1-million or 33 cents a year earlier. The expectation was for earnings of 37 cents per share.
Adjusted EBITDA decreased to $33.1-million compared to $34.7-million a year earlier and was below expectations of $35.7-million.
CIBC analyst Stephanie Price maintained her “neutral” rating (similar to hold) and lowered her price target to $30 from $31 after the results.
“We believe the company will continue to post below-historical 30 per cent margins in the near term as its product mix shifts away from high-margin license revenue and towards a greater proportion of SaaS revenue,” she wrote in a note.
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Clarke Inc. (CKI-T), the Halifax-based investment holding and real estate company, reported net income of $21.5-million in the fourth quarter of 2024 compared to $7.5-million in 2023. EPS of $1.54 per share compared to 54 cents a year earlier.
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Knight Therapeutics Inc. (GUD-T) has signed a deal to buy the assets of Paladin Pharma Inc. as the Canadian drug company looks to build out its domestic business after a strategic push into South America in recent years.
As the Globe’s Nicolas Van Praet reports, Knight will pay $120-million cash to seller Endo Operations Ltd. for Paladin as well as future contingency payments of up to US$15-million if it achieves certain sales targets, the Montreal-based company said in a statement Tuesday. Paladin generated revenues of $70-million last year from continuing operations.
Upcoming small-cap earnings:
March 17: Information Services Corp. (ISC-T), Quarterhill Inc. (QTRH-T), High Tide Inc. (HITI-X)
March 18: Neo Performance Materials Inc. (NEO-T), SNDL Inc. (SNDL-Q), Cipher Pharmaceuticals Inc. (CPH-T)
March 19: Gold Royalty Corp. (GROY-A), Charlotte’s Web Holdings Inc. (CWEB-T), AutoCanada Inc. (ACQ-T), Rescheduled: North American Construction Group Ltd. (NOA-T)
March 20: Hammond Power Solutions Inc. (HPS-A-T), Knight Therapeutics Inc. (GUD-T)
March 21: Premium Brands Holdings Corp. (PBH-T)
March 26: Terago Inc. (TGO-T)
March 28: Aimia Inc. (AIM-T), Galaxy Digital Holdings Ltd. (GLXY-T)
April 2: D2L Inc. (DTOL-T)
With a file from The Canadian Press