4 Canadian Small Caps with Big Operating Margin Increases

In a business world that’s becoming leaner, these stocks are doing it well and seeing the returns

SmallCapPower | September 16, 2016: When you need to figure out how efficiently a company operates, one place to look is at its operating margin. The operating margin refers to the percentage of every dollar of sales that the company keeps as profit (before interest and taxes). When the operating margin increases, it means the company is being more efficient and subsequently generating more profit per dollar of sales. By analyzing the operating margin, you can determine how likely it is that a company will be able to meet its debt obligations as they mature, and whether or not the company will go into default on its loans. That being said, the companies on our list have increased their operating margins more than 100% year over year.

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SciVacTranscontinental Inc. (TSE:TCL.A) – $18.23
Commercial Printing Services

Transcontinental Inc. is a printing company that has operations in print, flexible packaging, publishing and digital media, both in Canada and the United States. The Company’s segments include the Printing and Packaging Sector, and the Media Sector. The Media Sector generates revenues through print and digital publishing products, in French and English, of various types, such as newspapers, educational books, specialized publications for professionals, retail promotional content, mass and personalized marketing, mobile and interactive applications, and geotargeted door-to-door and digital distribution services.

  • Market Cap: $1,404.72 (M)
  • Operating Margin F0: 12.9%
  • Operating Margin F-1: 8.5%
  • Operating Margin F-2: 1.7%
  • Average YOY increase: 330%

SciVacPFB Corporation (TSE:PFB) – $8.70
Construction Supplies & Fixtures

PFB Corporation is engaged in manufacturing insulating building products made from expanded polystyrene (EPS) materials and marketing these products in North America. The Company operates under the brands Plasti-Fab EPS Product Solutions; Advantage ICF System; Insulspan SIPS; DuroFoam; DuroSpan; Riverbend Timber Framing; Precision Craft Log & Timber Homes; M.T.N. Design; Total Home Solution; Point Zero, and TimberScape. Its Plasti-Fab EPS Product Solutions supplies EPS foam cores used to manufacture Insulspan SIPS (Structural Insulating Panel Systems).

  • Market Cap: $58.43 (M)
  • Operating Margin F0: 8.3%
  • Operating Margin F-1: 2.9%
  • Operating Margin F-2: 1.8%
  • Average YOY increase: 188%

SciVacCeapro Inc. (TSXV:CZO) – $1.81
Biotechnology & Medical Research

Ceapro Inc. is a Canada-based growth-stage biotechnology company. Its primary business activities relate to the development and commercialization of natural products for personal care, cosmetic, human and animal health industries using technology, natural and renewable resources. The Company’s products include a commercial line of natural active ingredients, including beta glucan, avenanthramides (colloidal oat extract), oat powder, oat oil, oat peptides and lupin peptides, which are marketed to the personal care, cosmetic, medical and animal health industries, and Veterinary therapeutic products, including an oat shampoo, an ear cleanser and a dermal complex/conditioner, which are manufactured and marketed to veterinarians in Japan and Asia.

  • Market Cap: $131.65 (M)
  • Operating Margin F0: 30.7%
  • Operating Margin F-1: 22.5%
  • Operating Margin F-2: 6.9%
  • Average YOY increase: 174%

SciVacBrick Brewing Co. Ltd. (TSE:BRB) – $3.25

Brick Brewing Co. Limited is a Canada-based brewery that operates through the segment, which involves in the production, distribution and sale of alcohol-based products. It produces, sells, markets and distributes packaged and draft beer under the Waterloo brand name, and value beer under the Laker, Red Baron, Red Cap and Formosa brand names (collectively, the Brick Beer Brands). It also produces, sells, markets and distributes the Seagram Coolers across Canada, which includes vodka-based coolers, malt-based coolers and ciders.

  • Market Cap: $113.35 (M)
  • Operating Margin F0: 6%
  • Operating Margin F-1: 5.6%
  • Operating Margin F-2: 1.9%
  • Average YOY increase: 105%