The Canadian industrial stocks on our list appear undervalued as they trade at low EV/EBITDA multiples compared to their peers
SmallCapPower | January 25, 2018: Today, we have identified four mid-sized Canadian industrial stocks that have low forward EV/EBITDA multiples, trading at an average multiple of 6.4x compared to their peers, which trade at 12.3x. This could be an attractive value proposition for certain investors.
Carmanah Technologies Corp. (TSX:CMH) – $4.50
Electrical Components & Equipment
Carmanah Technologies is a Canada-based solar company that provides solar signaling and solar lighting solutions, such as solar-powered lampposts, beacons, and ID marking for wind farms. The Company plans to complete its machine-to-machine connectivity network in three years and double its partner network within five years.
- Market Cap: $85.1 Million
- Enterprise Value to EBITDA FY2017: 8.9x
- Forward Enterprise Value to EBITDA FY2018: 5.9x
- Forward Enterprise Value to EBITDA FY2019: 4.1x
- Peer Average Enterprise Value to EBITDA FY2017: 12.9x
- Peer Average Forward Enterprise Value to EBITDA FY2018: 12.3x
- Peer Average Forward Enterprise Value to EBITDA FY2019: 12.2x
Cervus Equipment Corp. (TSX:CERV) – $14.50
Heavy Machinery & Vehicles
Cervus Equipment is a Canada-based industrial company that manufactures and sells new and used heavy vehicles under a variety of well-known brands, including John Deere, Peterbilt, and Bobcat, for use in agriculture and industry. Cervus operates 64 dealerships across Canada, Australia, and New Zealand.
- Market Cap: $227.3 Million
- Enterprise Value to EBITDA FY2017: 6.0x
- Forward Enterprise Value to EBITDA FY2018: 5.9x
- Forward Enterprise Value to EBITDA FY2019: 4.9x
- Peer Average Enterprise Value to EBITDA FY2017: 12.9x
- Peer Average Forward Enterprise Value to EBITDA FY2018: 12.3x
- Peer Average Forward Enterprise Value to EBITDA FY2019: 12.2x
Exco Technologies Ltd. (TSX:XTC) – $9.95
Industrial Machinery and Equipment
Exco Technologies is a Canada-based industrial company that develops dies, moulds and other consumable equipment, primarily for the automotive and die-cast industries. Based in Canada, XTC has 17 manufacturing facilities across eight countries, which employ over 6,500 individuals.
- Market Cap: $422.3 Million
- Enterprise Value to EBITDA FY2017: 5.3x
- Forward Enterprise Value to EBITDA FY2018: 5.3x
- Forward Enterprise Value to EBITDA FY2019: 4.9x
- Peer Average Enterprise Value to EBITDA FY2017: 12.9x
- Peer Average Forward Enterprise Value to EBITDA FY2018: 12.3x
- Peer Average Forward Enterprise Value to EBITDA FY2019: 12.2x
Rocky Mountain Dealerships Inc. (TSX:RME) – $12.16
Heavy Machinery & Vehicles
Rocky Mountain Dealerships is a Canada-based industrial company that sells heavy vehicles for use in agriculture and construction. The Company sold $980 million of equipment in 2017. RME operates 34 dealerships across Western Canada.
- Market Cap: $241.7 Million
- Enterprise Value to EBITDA FY2017: 6.2x
- Forward Enterprise Value to EBITDA FY2018: 7.4x
- Forward Enterprise Value to EBITDA FY2019: 5.2x
- Peer Average Enterprise Value to EBITDA FY2017: 12.9x
- Peer Average Forward Enterprise Value to EBITDA FY2018: 12.3x
- Peer Average Forward Enterprise Value to EBITDA FY2019: 12.2x
Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.
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