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ADF Group Inc. SV (TSE:DRX)
TSX:DRX
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ADF Group Inc. SV (DRX) AI Stock Analysis

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TSE:DRX

ADF Group Inc. SV

(TSX:DRX)

Rating:70Outperform
Price Target:
C$11.50
▲(11.65%Upside)
ADF Group Inc.'s overall stock score reflects strong financial health and undervaluation, but is tempered by technical overbought signals and revenue challenges due to U.S. tariffs. The company's strategic contract wins and stable leadership are positive but may not fully offset the tariff impacts in the short term.
Positive Factors
Financial Performance
ADF Group reported financial results that largely beat estimates, with revenue of $107.4M and EBITDA of $23.1M surpassing expectations.
Shareholder Returns
ADF announced a cash utilization strategy including the intention to repurchase up to 3.0M shares and doubling its semi-annual dividend to $0.02/share.
Negative Factors
Market Conditions
U.S. non-residential construction spending growth has slowed, although figures are still reaching new all-time highs.

ADF Group Inc. SV (DRX) vs. iShares MSCI Canada ETF (EWC)

ADF Group Inc. SV Business Overview & Revenue Model

Company DescriptionADF Group Inc. SV (DRX) is a leading North American company specializing in the design and engineering of complex steel structures. Operating primarily in the construction and infrastructure sectors, the company offers a range of services including fabrication, installation, and engineering of large-scale projects. ADF Group Inc. serves a diverse clientele, which includes commercial, industrial, and institutional clients, providing them with high-quality, customized steel solutions.
How the Company Makes MoneyADF Group Inc. generates revenue through its comprehensive service offerings in the steel construction industry. The company's primary revenue streams include contracts for the fabrication and installation of steel structures, engineering services for complex steel projects, and maintenance and refurbishment of existing structures. ADF Group's earnings are significantly influenced by its ability to secure large-scale construction and infrastructure projects, often through competitive bidding processes. Strategic partnerships with construction firms and project developers, as well as long-term contracts with governmental and private sector clients, also play a crucial role in the company's financial performance. The company's expertise in handling complex, high-value projects helps it maintain a strong position in the market and ensures a steady flow of revenue.

ADF Group Inc. SV Earnings Call Summary

Earnings Call Date:Jun 10, 2025
(Q3-2025)
|
% Change Since: 51.69%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant improvements in net income, margins, and EBITDA, despite a slight quarterly revenue decline and some uncertainties related to the order backlog and market conditions.
Q3-2025 Updates
Positive Updates
Year-to-Date Revenue Growth
Year-to-date revenues reached $262.2 million, reflecting an 8.1% increase compared to last year.
Significant Increase in Gross Margins and EBITDA
Gross margins for the quarter were 30.4%, up from 24.4% in the previous year, and year-to-date margins were 31.7%, up from 21.1%. Adjusted EBITDA increased by 78.1% year-over-year.
Strong Net Income Growth
The company reported a net income of $16.4 million for the quarter, a significant increase from $11.2 million the previous year. Year-to-date net income increased by 75.9%.
Order Backlog and Strategic NCIB
The company has an order backlog of $330.3 million and announced a Normal Course Issuer Bid (NCIB) to repurchase shares, indicating confidence in future growth.
Negative Updates
Quarterly Revenue Decrease
Quarterly revenues were $80 million, which is $2.2 million lower than the same quarter last year.
Challenges with Order Backlog
Although confident about future contracts, there is a noted decrease in the order backlog from the beginning of the year.
Impact of U.S. Election and Tariffs
There is uncertainty due to the U.S. election and recent tariff announcements, which may cause market hesitation.
Company Guidance
During the ADF Group Inc.'s earnings call for Q3 2025, several key metrics and pieces of guidance were highlighted. The company reported revenues of $80 million for the quarter, a decrease of $2.2 million compared to the previous year, but a year-to-date increase of 8.1% to $262.2 million. The gross margin for the quarter improved to 30.4%, up from 24.4% in the same quarter last year, with an adjusted EBITDA of $24 million, marking a significant increase from the previous year's $17.8 million. Year-to-date, the gross margin rose to 31.7%, and the adjusted EBITDA saw a 78.1% increase to $72 million. Net income for the quarter was $16.4 million, or $0.55 per share, compared to $11.2 million, or $0.34 per share, in the previous year, with a year-to-date net income of $47.7 million, reflecting a 75.9% increase. The company closed the quarter with $65.5 million in cash and cash equivalents and a working capital of $1.4 million. The order backlog stood at $330.3 million, and the Board authorized a normal course issuer bid to repurchase up to 10% of the public float, highlighting confidence in their growth prospects despite some market uncertainties.

ADF Group Inc. SV Financial Statement Overview

Summary
ADF Group Inc. exhibits strong financial health with impressive growth in revenue and profitability, efficient capital structure, and robust cash flow management. The company is well-positioned in the metal fabrication industry with a solid balance between leveraging and equity financing, ensuring stability and growth potential.
Income Statement
88
Very Positive
ADF Group Inc. demonstrates robust profitability with a high Gross Profit Margin of 30.6% and a strong Net Profit Margin of 17.5% in TTM, indicating efficient cost management. The Revenue Growth Rate from the previous annual period to TTM is 15.1%, reflecting a healthy upward trajectory. EBIT and EBITDA margins at 25.1% and 26.4% respectively, further confirm operational efficiency and profitability.
Balance Sheet
72
Positive
The company's Balance Sheet is stable with a Debt-to-Equity Ratio of 0.24, indicating conservative leverage. ROE stands at 30.0% in TTM, showcasing efficient use of equity capital. However, the Equity Ratio is 55.9%, suggesting moderate reliance on equity financing, which is typical for the industry.
Cash Flow
85
Very Positive
ADF Group Inc.'s cash flow is strong, with a Free Cash Flow Growth Rate of 112.1% from the previous annual period, highlighting significant improvement. The Operating Cash Flow to Net Income Ratio of 2.04 in TTM indicates highly efficient cash generation relative to net income.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue339.63M331.02M250.89M280.74M172.59M
Gross Profit107.24M71.65M35.57M24.69M26.20M
EBITDA85.68M55.82M24.18M17.29M15.60M
Net Income56.79M37.62M14.94M9.56M6.87M
Balance Sheet
Total Assets307.90M328.61M271.62M201.05M189.95M
Cash, Cash Equivalents and Short-Term Investments59.98M72.38M7.19M7.13M17.81M
Total Debt45.63M48.84M51.52M36.67M25.58M
Total Liabilities138.59M166.47M146.63M92.60M90.39M
Stockholders Equity169.31M162.13M124.98M108.45M99.56M
Cash Flow
Free Cash Flow43.98M71.37M-14.77M-19.40M27.02M
Operating Cash Flow52.26M77.86M-2.61M2.67M28.84M
Investing Cash Flow-8.71M-6.27M-12.08M-21.99M-1.75M
Financing Cash Flow-62.07M-6.69M14.16M9.20M-12.44M

ADF Group Inc. SV Technical Analysis

Technical Analysis Sentiment
Positive
Last Price10.30
Price Trends
50DMA
7.70
Positive
100DMA
7.31
Positive
200DMA
8.26
Positive
Market Momentum
MACD
0.22
Negative
RSI
78.20
Negative
STOCH
67.20
Neutral
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 10.3 is above the 20-day moving average (MA) of 8.02, above the 50-day MA of 7.70, and above the 200-day MA of 8.26, indicating a bullish trend. The MACD of 0.22 indicates Negative momentum. The RSI at 78.20 is Negative, neither overbought nor oversold. The STOCH value of 67.20 is Neutral, 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

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
C$157.78M56.184.86%7.57%3.23%-60.49%
70
Outperform
C$289.46M6.1329.02%0.39%-19.66%15.33%
65
Neutral
C$170.40M13.6631.34%-3.13%
61
Neutral
C$6.52B7.743.45%2.56%6.46%-23.06%
53
Neutral
C$429.67M-111.61%-9.70%-9.53%
46
Neutral
C$6.29M34.86%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:DRX
ADF Group Inc. SV
10.30
-2.75
-21.07%
TSE:DE
Decisive Dividend
7.95
1.45
22.31%
TSE:IB
IBC Advanced Alloys
0.06
0.00
0.00%
TSE:DRT
DIRTT Environmental Solutions
0.90
0.35
63.64%
TSE:ACT
Aduro Clean Technologies
14.61
13.05
836.54%

ADF Group Inc. SV Corporate Events

Business Operations and Strategy
ADF Group Inc. Secures Major Contract in Quebec’s Energy Sector
Positive
Jul 23, 2025

ADF Group Inc. has secured a significant five-year contract in Quebec’s energy sector, valued between $35 million and $40 million annually, with a potential total of $400 million. This contract will enhance ADF’s operations by necessitating new equipment investments and hiring additional personnel, reinforcing its market position and contributing to Quebec’s global reputation.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$24.00 price target. To see the full list of analyst forecasts on ADF Group Inc. SV stock, see the TSE:DRX Stock Forecast page.

Executive/Board ChangesShareholder Meetings
ADF Group Inc. Announces Successful Director Elections
Positive
Jun 11, 2025

ADF Group Inc. announced the results of its director elections, with all nominees proposed in the management proxy circular being elected by a majority of shareholders. The election saw a high representation of voting rights, with approximately 90.17% of the total voting rights being exercised. This outcome reflects strong shareholder confidence in the company’s leadership, potentially reinforcing its strategic direction and operational stability.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$23.00 price target. To see the full list of analyst forecasts on ADF Group Inc. SV stock, see the TSE:DRX Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
ADF Group Inc. Faces Revenue Decline Amid U.S. Tariff Challenges
Negative
Jun 10, 2025

ADF Group Inc. reported a decline in revenues to $55.5 million for the first quarter ended April 30, 2025, compared to $107.4 million in the same period last year, primarily due to the impacts of U.S. tariffs. Despite a robust order backlog of $330.4 million, the tariffs have led to reduced fabrication hours and a work-sharing program at its Terrebonne plant, affecting the company’s margins and overall financial performance. The company’s net income also decreased to $8.7 million from $15.3 million a year ago, highlighting the ongoing challenges posed by the tariffs on its operations.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$23.00 price target. To see the full list of analyst forecasts on ADF Group Inc. SV stock, see the TSE:DRX Stock Forecast page.

Shareholder MeetingsFinancial Disclosures
ADF Group Inc. to Announce Q1 2026 Results and Host Annual Shareholders Meeting
Neutral
Jun 4, 2025

ADF Group Inc. announced it will release its Q1 2026 financial results on June 10, 2025, followed by a conference call hosted by CFO Jean-François Boursier to discuss the results and future outlook. The company will also hold its Annual Meeting of Shareholders on the same day, providing an opportunity for stakeholders to engage with the company’s leadership.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$23.00 price target. To see the full list of analyst forecasts on ADF Group Inc. SV stock, see the TSE:DRX Stock Forecast page.

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.Date of analysis: Jul 24, 2025