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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)

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Neutral 60 (OpenAI - 4o)
Rating:60Neutral
Price Target:
C$8.50
▲(8.14% Upside)
ADF Group Inc.'s overall stock score is driven by moderate financial performance and valuation, with significant challenges highlighted in the earnings call. While the company shows strong profitability and a stable balance sheet, the decline in revenue and cash flow poses risks. The technical analysis indicates mixed signals, and the valuation suggests potential undervaluation. Strategic initiatives may help mitigate some challenges, but the current outlook remains cautious.
Positive Factors
Order Backlog
A strong order backlog provides revenue visibility and stability, supporting future cash flows and operational planning.
Strategic Acquisition
The acquisition of Group LAR enhances ADF's capabilities and market reach, potentially increasing its competitive edge in the Canadian market.
Nuclear Certification
Nuclear certification opens new market opportunities in Ontario's expanding nuclear sector, diversifying revenue streams.
Negative Factors
Revenue Decline
Significant revenue decline impacts financial performance, potentially affecting investment capacity and strategic initiatives.
Decreased Gross Margins
Falling gross margins indicate increased costs or pricing pressures, which could erode profitability if not addressed.
Impact of U.S. Tariffs
Tariffs increase operational costs and disrupt supply chains, potentially impacting competitive positioning and profitability.

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

ADF Group Inc. SV Business Overview & Revenue Model

Company DescriptionADF Group Inc. engages in the design and engineering of connections in Canada and the United States. It also fabricates and installs complex steel structures and heavy steel built-ups, as well as miscellaneous and architectural metalwork services. In addition, the company offers products and services for various segments of the non-residential construction market, including office towers and high-rises, commercial and recreational buildings, airport facilities, industrial complexes, and transport infrastructures. It serves general contractors, project owners, engineering firms and project architects, structural steel erectors, and other steel structure fabricators. The company was formerly known as Les Entreprises El Drago Ltée and changed its name to ADF Group Inc. in August 1998. ADF Group Inc. was founded in 1956 and is headquartered in Terrebonne, Canada.
How the Company Makes MoneyADF Group generates revenue through multiple streams, including the fabrication and installation of steel structures, which are key components in various construction projects. The company's revenue model is primarily project-based, where it enters into contracts with clients to provide custom solutions for specific construction needs. Additionally, ADF Group benefits from long-term partnerships with major construction firms and developers, which facilitate a steady flow of contracts and projects. Factors contributing to its earnings include the ability to secure large-scale contracts, efficiency in project execution, and a strong reputation for quality and reliability in the industry.

ADF Group Inc. SV Earnings Call Summary

Earnings Call Date:Sep 11, 2025
(Q2-2026)
|
% Change Since: |
Next Earnings Date:Dec 03, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strategic initiatives such as the acquisition of Group LAR and new project announcements in Quebec, which aim to reduce reliance on the U.S. market. However, the significant declines in revenue, gross margins, and EBITDA, largely due to U.S. tariffs and increased costs, present substantial challenges. The overall sentiment reflects a company facing difficulties but taking steps to adapt and grow.
Q2-2026 Updates
Positive Updates
Strong Order Backlog
Order backlog reached $468 million as of July 31, 2025, not including the $104.5 million backlog from the Group LAR acquisition.
Strategic Acquisition
Acquisition of Group LAR, a leader in mechanically welded steel structures, expected to close soon, adding significant Canadian content to the backlog.
Nuclear Certification Achieved
ADF received nuclear certification, opening new opportunities in Ontario's expanding nuclear sector.
Infrastructure Project in Quebec
Announced a 5-year infrastructure project in Quebec with an option to extend for 5 more years, reducing reliance on the U.S. market.
Dividend Announcement
The Board approved a semiannual dividend of $0.02 per share, payable on October 16, 2025.
Negative Updates
Significant Revenue Decline
Quarterly revenues declined by $21.9 million compared to the previous year, with year-to-date revenues down from $182.3 million to $108.5 million.
Decreased Gross Margins
Gross margin for the quarter decreased from 36.9% to 20.7%, and year-to-date margins fell from 32.3% to 21.3%.
Impact of U.S. Tariffs
U.S. tariffs caused delays and increased costs, leading to a work-sharing program in Terrebonne, Quebec, affecting fabrication hours and revenues.
Adjusted EBITDA Decline
Quarterly adjusted EBITDA dropped from $24.9 million to $3.7 million, with year-to-date adjusted EBITDA falling from $48 million to $14.1 million.
Increased SG&A Expenses
SG&A expenses increased by $4.6 million for the quarter due to stock price variations affecting DSU and PSU valuations.
Reduced Net Income
Quarterly net income decreased from $16 million to $898,000, and year-to-date net income fell from $31.3 million to $9.6 million.
Company Guidance
In the recent conference call, ADF Group reported a decline in revenues for the quarter ending July 31, 2025, at $53 million, down $21.9 million from the previous year, with year-to-date revenues at $108.5 million compared to $182.3 million for the same period in 2024. The company closed the quarter with a gross margin of 20.7% and year-to-date gross margins at 21.3%, both decreased from the prior year's figures. Adjusted EBITDA for the quarter was reported at $3.7 million, significantly lower than the $24.9 million from the same quarter last year. The company ended the quarter with a net income of $898,000 or $0.03 per share, down from $16 million or $0.51 per share year-over-year. ADF's order backlog stood at $468 million as of July 31, 2025. The company is dealing with challenges related to U.S. tariffs impacting fabrication hours and costs but is looking forward with strategic initiatives, including a recent acquisition of Group LAR, expected to close soon, and a new infrastructure project in Quebec. The company plans to invest approximately $11 million in CapEx for the fiscal year, with updates to their ERP system and new equipment for the Terrebonne site. Additionally, ADF announced a second semiannual dividend of $0.02 per share, payable on October 16, 2025.

ADF Group Inc. SV Financial Statement Overview

Summary
ADF Group Inc. shows strong financial health with impressive revenue growth, profitability, and cash flow management. The company maintains a stable balance sheet with conservative leverage and efficient equity use.
Income Statement
65
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
50
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue265.88M339.63M331.02M250.89M280.74M172.59M
Gross Profit71.44M107.24M71.65M35.57M24.69M26.20M
EBITDA54.73M85.68M55.82M24.18M17.29M15.60M
Net Income35.17M56.79M37.62M14.94M9.56M6.87M
Balance Sheet
Total Assets306.77M307.90M328.61M271.62M201.05M189.95M
Cash, Cash Equivalents and Short-Term Investments50.93M59.98M72.38M7.19M7.13M17.81M
Total Debt39.23M45.63M48.84M51.52M36.67M25.58M
Total Liabilities140.74M138.59M166.47M146.63M92.60M90.39M
Stockholders Equity166.03M169.31M162.13M124.98M108.45M99.56M
Cash Flow
Free Cash Flow-4.20M46.77M71.37M-14.77M-19.40M27.02M
Operating Cash Flow1.68M55.06M77.86M-2.61M2.67M28.84M
Investing Cash Flow-5.83M-8.71M-6.27M-12.08M-21.99M-1.75M
Financing Cash Flow-21.65M-62.07M-6.69M14.16M9.20M-12.44M

ADF Group Inc. SV Technical Analysis

Technical Analysis Sentiment
Negative
Last Price7.86
Price Trends
50DMA
8.76
Negative
100DMA
8.16
Negative
200DMA
8.09
Negative
Market Momentum
MACD
-0.26
Positive
RSI
35.10
Neutral
STOCH
15.94
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DRX, the sentiment is Negative. The current price of 7.86 is below the 20-day moving average (MA) of 8.77, below the 50-day MA of 8.76, and below the 200-day MA of 8.09, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 35.10 is Neutral, neither overbought nor oversold. The STOCH value of 15.94 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DRX.

ADF Group Inc. SV Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
65
Neutral
148.16M24.3410.32%7.52%10.56%25.19%
60
Neutral
C$220.89M6.5022.54%0.51%-24.64%-27.22%
52
Neutral
543.54M-39.37-103.00%-31.50%-22.27%
46
Neutral
9.73M-3.28
46
Neutral
152.26M51.9511.21%-2.68%
63
Neutral
$10.79B15.437.44%2.01%2.89%-14.66%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:DRX
ADF Group Inc. SV
7.86
-2.89
-26.88%
TSE:DE
Decisive Dividend
7.40
1.66
28.92%
TSE:IB
IBC Advanced Alloys
0.08
<0.01
14.29%
TSE:TGH
Tornado Global Hydrovacs
1.85
0.86
86.87%
DRTTF
DIRTT Environmental Solutions
0.58
0.06
11.54%
TSE:ACT
Aduro Clean Technologies
17.51
11.30
181.96%

ADF Group Inc. SV Corporate Events

Business Operations and StrategyFinancial Disclosures
ADF Group Inc. Reports Revenue Decline Amid U.S. Tariff Uncertainty
Negative
Sep 11, 2025

ADF Group Inc. reported a decline in revenues and net income for the three and six-month periods ending July 31, 2025, attributed to the uncertainty surrounding U.S. tariffs and increased steel prices. Despite these challenges, the company saw a 60% increase in its order backlog, indicating strong future demand, although it faced operational disruptions at its Terrebonne plant due to a Work-Sharing program, which has since ended.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$11.50 price target. To see the full list of analyst forecasts on ADF Group Inc. SV stock, see the TSE:DRX Stock Forecast page.

Financial Disclosures
ADF Group Inc. Announces Upcoming Financial Results Release and Conference Call
Neutral
Sep 4, 2025

ADF Group Inc. has announced that it will release its financial results for the three-month and six-month periods ending July 31, 2025, on September 11, 2025. The announcement includes an invitation to a conference call hosted by the CFO, Jean-François Boursier, to discuss the results and future outlook. This event is significant for stakeholders as it provides insights into the company’s performance and strategic direction.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$11.50 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 StrategyM&A Transactions
ADF Group Inc. to Acquire Groupe LAR Inc., Expanding Market Reach
Positive
Sep 2, 2025

ADF Group Inc. has announced an agreement to acquire Groupe LAR Inc., a Canadian leader in the design and manufacture of mechanically welded steel structures, primarily serving the hydroelectricity market. The acquisition is expected to create significant synergies, contribute positively to ADF’s net income, and diversify its offerings amidst U.S. tariff threats, while maintaining and potentially increasing jobs in the Saguenay-Lac-Saint-Jean region.

The most recent analyst rating on (TSE:DRX) stock is a Buy with a C$10.50 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: Sep 14, 2025