AutoCanada (ACQ) AI Stock Analysis

• Market Cap: C$371.64M
• Dividend Yield: N/A
• Average Volume (3M): 18.96K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.46
• Revenue Growth: -16.86%
• EPS Growth: -236.70%
• Country: CA
• Employees: 2,550
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Auto - Dealerships
• EPS (TTM): -2.93
• Shares Outstanding: 23,611,176
• 10 Day Avg. Volume: 14,627
• 30 Day Avg. Volume: 18,961
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.07
• Price to Cash Flow (P/CF): 2.70
• P/FCF Ratio: 4.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$19.20
• Price Target Upside: 21.98% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

AutoCanada faces significant challenges with declining revenue and high leverage, which weigh heavily on its financial performance score. The technical indicators suggest neutral to slightly negative momentum, while the valuation appears unattractive due to a negative P/E ratio and lack of dividend yield. Although the earnings call highlighted some positive aspects in Canadian operations, these are offset by broader economic uncertainties and operational losses, particularly in the U.S. Overall, the stock score reflects these mixed factors, indicating a cautious outlook.

Positive Factors

Cost Management

The company's focus on operational expenses should deliver savings over the coming quarters.

Demand

Several metrics from Q3/24 suggest demand for vehicles is holding in better than expected.

Financial Performance

Q3/24 adjusted EBITDA of $53mm was a material beat versus BMO/Street estimates.

Negative Factors

Management Execution

Uneven management execution, most recently on operational expenses, has kept the stock at Market Perform.

Operational Challenges

Uneven management execution has kept the stock at Market Perform, specifically related to opex.

Strategic Actions

Implemented strategic review actions include selling two Canadian Stellantis dealerships and closing seven unprofitable Right Ride locations.

AutoCanada Business Overview & Revenue Model

Company Description

AutoCanada Inc. (ACQ) is a leading multi-location automobile dealership group in Canada, specializing in the sale of new and used vehicles. The company operates a network of franchised automobile dealerships, offering a diverse range of automotive brands across several provinces. In addition to vehicle sales, AutoCanada provides associated services such as automotive repair, maintenance, and the sale of parts and accessories.

How the Company Makes Money

AutoCanada generates revenue through multiple streams, primarily from the sale of new and used vehicles, which constitutes the largest portion of its income. The company also earns significant revenue from its after-sales services, including automotive repair and maintenance, as well as the sale of parts and accessories. Additionally, AutoCanada benefits from finance and insurance products offered to its customers, which include extended warranties, insurance contracts, and vehicle leasing and financing options. The company's partnerships with major automotive manufacturers for dealership rights and access to a wide range of vehicle inventory are crucial to its operations and revenue generation.

AutoCanada Financial Statement Overview

Summary

AutoCanada exhibits strengths in gross margin management and a slightly improved equity ratio. However, the significant drop in revenue and net income in 2024, coupled with high leverage, poses risks. Cash flow has weakened, but operational cash still supports the company. Overall, financial health is challenged by profitability and leverage concerns.

Income Statement

The company experienced a significant decline in revenue from 2023 to 2024, alongside a negative net income for 2024. Despite this, gross profit margin improved over the years, indicating better cost management. The EBIT and EBITDA margins have shown volatility, reflecting the challenges in maintaining consistent profitability.

Balance Sheet

The debt-to-equity ratio is high, indicating significant leverage, which could be risky during downturns. However, the equity ratio shows a slight improvement, suggesting a gradual increase in equity base relative to assets. Return on equity is negative for 2024, driven by the net loss.

Cash Flow

Free cash flow has decreased significantly, largely due to the decrease in operating cash flow and higher capital expenditures. The operating cash flow to net income ratio indicates that cash generation relative to net income has weakened, but the company maintains a level of operational cash flow that supports its operations.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.35B	6.44B	6.04B	4.65B	3.33B
	Gross Profit
882.28M	479.23M	1.04B	834.18M	547.33M
	EBIT
171.32M	206.52M	254.55M	270.07M	70.21M
	EBITDA
164.34M	217.30M	273.15M	326.40M	100.74M
	Net Income Common Stockholders
-68.23M	50.49M	85.44M	164.21M	-6.62M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
67.34M	103.15M	108.30M	102.48M	107.70M
	Total Assets
3.01B	3.16B	2.86B	2.26B	1.90B
	Total Debt
2.01B	2.23B	2.03B	1.45B	1.35B
	Net Debt
1.94B	2.13B	1.92B	1.34B	1.24B
	Total Liabilities
2.51B	2.59B	2.37B	1.74B	1.54B
	Stockholders Equity
468.03M	534.85M	457.90M	493.41M	341.87M
Cash Flow		Free Cash Flow
-2.45M	40.02M	95.31M	78.37M	116.90M
	Operating Cash Flow
31.63M	119.53M	147.97M	112.94M	137.87M
	Investing Cash Flow
67.86M	-125.43M	-228.02M	-215.37M	-35.12M
	Financing Cash Flow
-93.92M	183.60M	83.21M	97.00M	-51.02M

AutoCanada Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.74
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACQ, the sentiment is Negative. The current price of 15.74 is above the 20-day moving average (MA) of 15.60, below the 50-day MA of 16.55, and below the 200-day MA of 16.98, indicating a neutral trend. The MACD of -0.21 indicates Negative momentum. The RSI at 47.90 is Neutral, neither overbought nor oversold. The STOCH value of 61.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ACQ.

AutoCanada Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LNF	75 Outperform	C$1.53B	9.96	14.17%	3.47%	1.78%	10.47%
MTL	73 Outperform	C$1.08B	9.70	10.81%	6.13%	3.28%	-14.21%
CTC	69 Neutral	$8.56B	13.51	15.17%	3.30%	-1.79%	318.70%
RCH	67 Neutral	C$1.78B	21.22	9.08%	1.87%	4.21%	-18.67%
Sector *	60 Neutral	$6.86B	11.61	3.16%	4.15%	2.41%	-21.45%
ACQ	56 Neutral	C$371.64M	―	7.01%	―	-16.86%	-236.70%
DOO	45 Neutral	C$3.49B	19.66	-3.01%	1.77%	-23.54%	-130.34%

AutoCanada Corporate Events

AutoCanada to Announce Q1 2025 Financial Results and Host Virtual Shareholders Meeting

AutoCanada Inc. announced the release of its Q1 2025 financial results on May 14, 2025, followed by a conference call and webcast for analysts and the public. The company also detailed its virtual Annual and Special Shareholders Meeting scheduled for May 15, 2025. These announcements highlight AutoCanada’s commitment to transparency and engagement with stakeholders, potentially impacting its market positioning and investor relations.

Spark’s Take on TSE:ACQ Stock

According to Spark, TipRanks’ AI Analyst, TSE:ACQ is a Neutral.

AutoCanada’s overall score reflects a challenging financial landscape with high leverage and profitability issues, albeit with some strength in cost management and strategic realignments. Technical indicators suggest a cautious approach due to potential bearish signals. Valuation is weak with a negative P/E ratio and no dividend yield, while the earnings call provides a mixed sentiment with notable improvements in Canadian operations but ongoing challenges in U.S. operations.

To see Spark’s full report on TSE:ACQ stock, click here.

AutoCanada Adjusts Credit Facility Amid Tariff Concerns

AutoCanada has announced a temporary adjustment to its credit facility, increasing its maximum permitted Total Net Funded Debt to EBITDA ratio from 5.50:1.00 to 6.00:1.00 for the second quarter of 2025, before reducing it to 4.50:1.00 in July. This measure is a precautionary response to the uncertain impact of the current tariff environment on the company’s financial performance, indicating a strategic approach to maintaining financial flexibility amidst potential market challenges.

AutoCanada Reports Q4 Results and Strategic Shift Amid Market Challenges

AutoCanada reported a decrease in revenue from continuing operations to $1,261.9 million, with a net loss from total operations of $38.4 million for the fourth quarter of 2024. Despite challenges, the company saw a significant improvement in net income from continuing operations, achieving $7.1 million compared to a loss in the previous year. The company completed a strategic review, resulting in the sale of non-core dealerships and the closure of RightRide locations, which is expected to improve financial performance. AutoCanada is focusing on its Operational Transformation Plan to achieve cost savings and enhance operational efficiency, despite facing a cooling Canadian vehicle market and potential risks from U.S. tariffs.

AutoCanada to Release Q4 2024 Financial Results and Host Conference Call

AutoCanada announced it will release its financial results for the fourth quarter and full year of 2024 on March 19, 2025, followed by a conference call and webcast. This event will provide insights into the company’s performance and future outlook, potentially impacting its market positioning and stakeholder interests.