Wajax Corporation: Hold Rating Amid Declining Earnings and Market Uncertainty

Devin Dodge, an analyst from BMO Capital, maintained the Hold rating on Wajax Corporation (WJX – Research Report). The associated price target is C$22.00.

Devin Dodge has given his Hold rating due to a combination of factors impacting Wajax Corporation’s current and future performance. The company’s financial results for 2024 showed a decline in earnings, with adjusted diluted EPS and EBIT both experiencing significant year-over-year decreases. This decline was primarily attributed to lower gross margins and increased competitive pressures, which are expected to persist into 2025.
Additionally, while there was a positive increase in revenue driven by new equipment sales, demand in other business lines remained weak. The ongoing US-Canada trade tensions further contribute to the uncertainty in the market, affecting customer activity levels. Moreover, Wajax’s leverage remains high, with net debt-to-adjusted EBITDA exceeding the company’s target range. Despite some positive aspects, such as strong activity in the mining and energy sectors and potential benefits from its relationship with Hitachi, the overall outlook lacks a clear catalyst for a valuation re-rating, justifying the Hold rating.

WJX’s price has also changed moderately for the past six months – from C$24.670 to C$17.300, which is a -29.87% drop .