Corporate earnings, it’s been said, moves the markets, or more specifically the stock prices of those companies that either surpass or fall short of analyst expectations. This is especially true in the small cap space where many firms likely feel fortunate to be cash-flow positive. The following five companies have all shown signs of earnings growth during the past two years, most of which have also seen their stock prices outperform as well.
Cipher Pharmaceuticals Inc. (TSX: CPH): This growing specialty pharmaceutical company is a true Canadian success story, as its stock price has skyrocketed from under $1 to more than $15 in less than three years. Cipher has three commercial products and a fourth in development to go along with eight marketing partnerships. The company claims to be the only Canadian biopharma to secure three approved products in U.S. and Canada with its acne products, Absorica and Epuris, driving its growth.
During its most recent quarter (Q3 2014), Cipher reported net income of $8.7 million, up from $3.4 million during the same period last year. For fiscal year 2013, the company reported earnings of $0.97 a share, up from $0.10 a share in 2012. Its cash balance, meanwhile, has grown steadily from about $10 million in Q1 2012 to over $47 million in its most recent quarter.
Cipher shares also began trading on the NASDAQ on November 24, 2014, which should give its stock even greater exposure.
Avigilon Corporation (TSX: AVO): The company produces high-definition cameras for video surveillance and security. About half its revenue comes from the United States, while one-fifth comes from emerging markets, and that number is growing quickly. Sales in both the U.K. and Latin America nearly doubled from 2012 to 2013. Avigilon’s revenue, in fact, has been growing at a compound annual growth rate of 100% since 2008.
The company’s net income for Q3 2014 (its most recent quarter) increased 35% year-over-year to $11.6 million. Avigilon’s annual earnings per share have surged from $0.20 in 2011 to $0.54 in 2013. Despite this, though, the company’s stock price has slumped from more than $34 a share in the past year to its most recent price of $16.77.
Ag Growth International Inc. (TSX: AFN): The company manufactures portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems.
Ag Growth’s annual earnings per share have grown from$1.37 to $1.75 during the past two years, while its dividend payment ratio has fallen to 57% from 93%. Its stock is currently yielding about 4.4%.
The company recently announced the acquisition of Westeel, a grain storage container provider, for $221.5 million in cash. Ag Growth expects Westeel to generate Adjusted EBITDA of approximately $20 million in 2014. The two companies combined are expected to generate a pro forma annual revenue increase of approximately 44% to $580 million for the 12-month period ended September 30, 2014. Ag Growth’s stock price, meanwhile, has jumped about 83% during the past two years to its recent price of $55 a share.
Badger Daylighting Ltd. (TSX: BAD): Badger provides non-destructive hydrovac excavation services so workers can dig safely in areas with buried pipes and cable. This is done by using a pressurized water stream to liquefy the soil cover, which is then removed with a powerful vacuum system and deposited into a storage tank housed on a truck.
Badger’s annual profit per share has increased from $0.60 in 2010 to $1.09 in 2013, while in its most recent quarter earnings per share surged to $0.43 from $0.32. The company’s Return on Equity has also averaged 27% during the past five years.
Its share price, meanwhile, has nearly tripled during the past two years including the payment of a $0.03 per share monthly dividend in that time period and its current yield is about 1.2%.
AutoCanada Inc. (TSX: ACQ): AutoCanada is one of the largest, and the only publicly-listed, automotive dealership group in Canada, operating 35 franchised dealerships in eight provinces.
The company’s most recent quarter saw earnings per share surge 45.4% to $0.74 from $0.51, while its annual EPS increased from $1.22 in 2012 to $1.83 in 2013.
During the past nearly two years its stock price has soared more than 218%, which included the payment of a dividend that since Q1 2011 has risen for 13 consecutive quarters from $0.04 to $0.23 per share, or about $0.16 to $0.92 per share annually for a current yield of about 2%.
