ADF Group Inc. SV (TSE:DRX)
TSX:DRX
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ADF Group Inc. SV
(TSX:DRX)
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Rating:76Outperform
Price Target:
C$15.00
▲(86.34% Upside)
Action:Reiterated
Date:06/10/26
The score is driven primarily by solid underlying financial strength (growth and low leverage) despite margin and cash-flow normalization risk, supported by strong technical momentum. Valuation is very attractive (low P/E and high dividend yield), while the latest earnings call tempers the outlook with near-term margin stagnation and tariff uncertainty.
Positive Factors
Conservative balance sheet / low leverage
Low debt-to-equity (~0.23) and an expanding equity base give ADF durable financial flexibility. This conservatism supports bidding on large projects, funds planned CapEx and acquisitions, underpins the reinstated dividend, and reduces refinancing risk through cyclical downturns.
Negative Factors
Material margin compression
An 8.5ppt drop in gross margin and a ~10ppt EBITDA margin contraction signal weaker earnings power. Persistent mix shifts and cost pressures can permanently depress returns on projects, constrain reinvestment capacity and make margin recovery dependent on successful integration and equipment upgrades.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative balance sheet / low leverage
Low debt-to-equity (~0.23) and an expanding equity base give ADF durable financial flexibility. This conservatism supports bidding on large projects, funds planned CapEx and acquisitions, underpins the reinstated dividend, and reduces refinancing risk through cyclical downturns.
Read all positive factors
ADF Group Inc. SV (DRX) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$438.86M
Dividend Yield0.46%
Average Volume (3M)67.60K
Price to Earnings (P/E)14.3
Beta (1Y)0.94
Revenue Growth5.12%
EPS Growth-38.32%
CountryCA
Employees561
SectorIndustrials
Sector Strength72
IndustryManufacturing - Metal Fabrication
Share Statistics
EPS (TTM)1.20
Shares Outstanding16,476,336
10 Day Avg. Volume58,672
30 Day Avg. Volume67,603
Financial Highlights & Ratios
PEG Ratio-0.19
Price to Book (P/B)1.37
Price to Sales (P/S)0.97
P/FCF Ratio6.27
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$13.00Price Target Upside61.49% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)1.39
Revenue Forecast (FY)C$341.20M
ADF Group Inc. SV Business Overview & Revenue Model
Company Description
ADF Group Inc. provides specialized services in structural steel, spanning the design and engineering of connections for projects in Canada and the United States. The company undertakes the fabrication and erection of complex steel frameworks, inc...
How the Company Makes Money
ADF Group Inc. primarily makes money by bidding on and executing structural steel contracts for construction projects. Revenue is generated from (1) fabrication and sale of structural steel components (cutting, machining, welding, assembling) deli...
ADF Group Inc. SV Earnings Call Summary
Earnings Call Date:Apr 16, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Sep 03, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: material deterioration in top-line and profitability metrics driven by tariffs, an unfavorable mix and the carryover of lower-margin LAR contracts, contrasted with strong liquidity, a sizable backlog (including $157.3M of newly announced contracts), strategic acquisition-driven diversification into hydro, and planned CapEx to restore margins longer term. Management expects revenue growth in FY2027 but anticipates near-term margin stagnation while integration and expansion deliver benefits.Positive Updates
Strong cash position and operating cash flow
Operating cash flow of $49.4M; cash and cash equivalents of $62.7M, up $2.7M year-over-year, providing liquidity despite acquisition and NCIB activity.
Negative Updates
Material revenue decline year-over-year
Full-year revenue fell to $258.7M from $339.6M a year ago, a decrease of $80.9M or approximately -23.8% YoY, driven by tariff-related delays and an unfavorable project mix versus an exceptional prior year.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong cash position and operating cash flow
Operating cash flow of $49.4M; cash and cash equivalents of $62.7M, up $2.7M year-over-year, providing liquidity despite acquisition and NCIB activity.
Read all positive updates
Company Guidance
Management guided to revenue growth for fiscal 2027 but warned margins will likely “stagnate” in the first half and only improve in H2, saying they would be satisfied to maintain or slightly improve FY2026’s full‑year gross margin of 23.1% (Q4 at 21.5% vs 31.0% prior-year Q4) after a year that produced revenues of $258.7M, adjusted EBITDA of $43.5M (16.8% of revenues) versus $91.3M (26.9%) a year earlier, and net income of $26.3M ($0.93/sh) versus $56.8M ($1.84). They reiterated expectations that the Groupe LAR acquisition (closed Sept 18, 2025) will drive future improvement — LAR contributed ~$20M of revenue and ~$2M of gross margin since acquisition, $13.8M of Q4 revenue and $138.2M of backlog included at year‑end — while the company finished the year with cash from operations of $49.4M, cash and equivalents of $62.7M (up $2.7M), working capital of $104.8M (down $4.4M), an ending backlog of $561.1M (excluding $157.3M of new contracts announced last week), and a semi‑annual dividend of $0.02/sh payable May 15 (record Apr 27). Capital spending was $11.1M this year with a planned ~ $35M for FY2027 (mostly for LAR plant expansion and modernization, construction to start this year with limited FY27 operational benefit and fuller benefits in FY28), and management cautioned that a new 10% U.S. tariff (applied to the commercial invoice including profit, roughly $300/ton and about a 5% margin headwind on affected jobs) creates uncertainty but said they are working with U.S. clients to mitigate pass‑through and expect to leverage their rebalanced Canadian/U.S. backlog and Montana capacity.ADF Group Inc. SV Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
84
Very Positive
Cash Flow
62
Positive
| Breakdown | TTM | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 | Jan 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 302.47M | 258.74M | 339.63M | 331.02M | 250.89M | 280.74M |
| Gross Profit | 70.78M | 59.77M | 107.24M | 71.65M | 35.57M | 24.69M |
| EBITDA | 48.68M | 43.50M | 85.68M | 55.82M | 24.18M | 17.29M |
| Net Income | 29.60M | 26.31M | 56.79M | 37.62M | 14.94M | 9.56M |
Balance Sheet | ||||||
| Total Assets | 346.40M | 328.68M | 307.90M | 328.61M | 271.62M | 201.05M |
| Cash, Cash Equivalents and Short-Term Investments | 62.13M | 62.73M | 59.98M | 72.38M | 7.19M | 7.13M |
| Total Debt | 40.20M | 41.63M | 45.63M | 48.84M | 51.52M | 36.67M |
| Total Liabilities | 150.82M | 145.07M | 138.59M | 166.47M | 146.63M | 92.60M |
| Stockholders Equity | 195.57M | 183.60M | 169.31M | 162.13M | 124.98M | 108.45M |
Cash Flow | ||||||
| Free Cash Flow | 17.99M | 40.09M | 46.77M | 71.37M | -14.77M | -19.40M |
| Operating Cash Flow | 32.54M | 47.49M | 55.06M | 77.86M | -2.61M | 2.67M |
| Investing Cash Flow | -34.69M | -27.27M | -8.71M | -6.27M | -12.08M | -21.99M |
| Financing Cash Flow | -10.37M | -14.89M | -62.07M | -6.69M | 14.16M | 9.20M |
ADF Group Inc. SV Technical Analysis
Positive
8.05
Price Trends
10.99
Positive
10.24
Positive
9.15
Positive
Market Momentum
1.26
Negative
67.80
Neutral
84.55
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DRX, the sentiment is Positive. The current price of 8.05 is below the 20-day moving average (MA) of 12.32, below the 50-day MA of 10.99, and below the 200-day MA of 9.15, indicating a bullish trend. The MACD of 1.26 indicates Negative momentum. The RSI at 67.80 is Neutral, neither overbought nor oversold. The STOCH value of 84.55 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:DRX.
ADF Group Inc. SV Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$438.86M | 14.33 | 15.07% | 0.46% | 5.12% | -38.32% | |
73 Outperform | C$2.48B | 24.47 | 13.48% | 5.63% | -17.56% | -11.37% | |
67 Neutral | C$636.96M | 10.19 | 11.63% | 5.09% | -3.59% | 50.73% | |
66 Neutral | C$3.38B | 67.09 | 11.25% | 2.88% | 1.05% | -50.79% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | C$3.07B | 79.87 | 3.71% | 2.38% | 26.30% | ― | |
49 Neutral | C$387.41M | -7.08 | -20.06% | 2.62% | 2.84% | -39.47% |
* Industrials Sector Average
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ADF Group Inc. SV Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
ADF Group Profits Decline but Record Backlog and Canadian Shift Bolster Outlook
Neutral
Apr 16, 2026
ADF Group Inc. reported fiscal 2026 revenue of $258.7 million and net income of $26.3 million, down sharply from the prior year as gross margin narrowed to 23.1% amid lower volumes and the impact of U.S. tariffs on both demand and steel prices. To...
Business Operations and Strategy
ADF Group Secures $157 Million in New Steel Contracts Across Quebec and U.S.
Positive
Apr 9, 2026
ADF Group Inc., a North American specialist in complex steel superstructures for non-residential infrastructure, has expanded its presence across Canada and the United States through its integrated design, fabrication, coating and installation cap...
Business Operations and StrategyFinancial Disclosures
ADF Group sets April 16 conference call to review fiscal 2026 results and outlook
Neutral
Apr 7, 2026
ADF Group Inc. will release its financial results for the fiscal year ended January 31, 2026, on April 16, 2026, before markets open, and will host a conference call the same morning led by Chief Financial Officer Jean-François Boursier to re...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.