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K-Bro Linen (TSE:KBL)
:KBL
Canadian Market

K-Bro Linen (KBL) AI Stock Analysis

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K-Bro Linen

(TSX:KBL)

Rating:72Outperform
Price Target:
C$39.00
▲(11.17%Upside)
K-Bro Linen's overall score is supported primarily by strong financial performance and positive corporate events, such as strategic acquisitions enhancing its market position. While technical indicators show mixed signals and valuation is moderate, the attractive dividend yield adds to the stock's appeal.

K-Bro Linen (KBL) vs. iShares MSCI Canada ETF (EWC)

K-Bro Linen Business Overview & Revenue Model

Company DescriptionK-Bro Linen (KBL) is a leading provider of linen and laundry services primarily serving the healthcare and hospitality sectors across Canada and the United Kingdom. The company specializes in offering high-quality linen rental, laundry processing, and textile management solutions, ensuring a reliable supply of clean, hygienic linens and garments to hospitals, long-term care facilities, and hotels.
How the Company Makes MoneyK-Bro Linen generates revenue primarily through its contract-based services, where it enters into long-term agreements with healthcare and hospitality institutions for the rental and laundering of linens and garments. These contracts often include comprehensive textile management services, allowing clients to outsource their linen and laundry needs. Additionally, K-Bro Linen benefits from economies of scale and operational efficiencies in its processing facilities, which contribute to its profitability. The company's revenue streams are further supported by its strategic presence in multiple markets, enabling it to leverage cross-border expertise and relationships.

K-Bro Linen Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q3-2024)
|
% Change Since: -3.09%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial performance with significant revenue and EBITDA growth driven by acquisitions and strong hospitality sector performance. Despite the positive outlook and strategic positioning for future growth, there were concerns about increased costs, especially relating to corporate expenses and new employer taxes in the U.K.
Q3-2024 Updates
Positive Updates
Record Third Quarter Revenue
K-Bro Linen Systems Inc. reported Q3 2024 revenue of $104 million, a 20% increase compared to Q3 2023.
Hospitality Revenue Growth
Hospitality revenue increased by 37% in Q3 2024, following acquisitions and implemented price increases.
Adjusted EBITDA Improvement
Consolidated adjusted EBITDA increased by 27.2% to $23 million in Q3 2024 compared to $18.1 million in 2023.
Strong U.K. Division Performance
The U.K. division's adjusted EBITDA margin increased to 24.3% in Q3 2024 from 20.3% in 2023, driven by the acquisition of Shortridge and cost efficiencies.
Positive Outlook for Business
K-Bro Linen Systems Inc. sees a positive outlook with steady volume trends in Healthcare and Hospitality, and remains well-positioned for future M&A.
Negative Updates
Increased Corporate and Transaction Costs
Corporate costs increased by $0.9 million in Q3 2024 and by $4.2 million on a year-to-date basis, mainly due to transaction costs and consulting fee expenditures.
Higher Delivery and Utility Costs
Delivery costs increased by $2.2 million, and utility costs increased by $0.8 million in Q3 2024 compared to the previous year.
Employer Tax Increase in the U.K.
A sizable increase in employer tax in the U.K. is expected to impact margins in 2025, offsetting some gains from reduced natural gas costs.
Company Guidance
During K-Bro Linen Systems Inc.'s Q3 2024 earnings call, the company reported impressive financial metrics, highlighting a 20% increase in consolidated revenue compared to Q3 2023. This growth was driven by a 6% rise in healthcare revenue and a substantial 37% increase in hospitality revenue. Adjusted EBITDA for the quarter was $23 million, reflecting a 27.2% increase from the previous year, with the adjusted EBITDA margin improving to 22% from 20.8%. The company's net earnings grew by 21.9% to $8.1 million, and net earnings as a percentage of revenue slightly increased to 7.8%. K-Bro also reported a strong balance sheet with a debt-to-EBITDA ratio, excluding leases, of just under 2.5x. Additionally, the company noted its active pursuit of acquisitions, contributing to its growth strategy, and expressed optimism about its organic growth prospects and future M&A opportunities.

K-Bro Linen Financial Statement Overview

Summary
K-Bro Linen shows strong revenue growth and robust cash flow generation with high gross margins. However, negative EBIT margins are a concern, though the company remains financially stable with reasonable leverage.
Income Statement
75
Positive
K-Bro Linen has shown a strong revenue growth rate with a substantial increase from the previous year. The gross profit margin is exceptionally high, indicating effective cost management. However, the EBIT margin is currently negative, which is a concern despite positive EBITDA margins. Net profit margin is modest but shows consistency in profitability.
Balance Sheet
70
Positive
The company maintains a reasonable debt-to-equity ratio, though it has increased slightly over the years. The return on equity is moderate, reflecting stable but not exceptional returns for shareholders. The equity ratio indicates a balanced asset structure, though stockholders' equity has not grown significantly.
Cash Flow
80
Positive
K-Bro Linen has demonstrated robust free cash flow growth, which is a positive indicator for operational efficiency and financial health. The operating cash flow to net income ratio is favorable, indicating strong cash generation relative to profits. Free cash flow conversion from net income is solid, supporting potential reinvestment and debt servicing.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue373.61M320.88M276.62M223.99M196.59M
Gross Profit323.57M114.48M234.35M186.99M164.82M
EBITDA68.76M56.45M36.49M42.79M38.24M
Net Income18.71M17.61M3.91M8.69M3.78M
Balance Sheet
Total Assets438.15M364.72M325.76M332.52M323.81M
Cash, Cash Equivalents and Short-Term Investments9.42M5.86M2.64M1.11M2.42M
Total Debt178.91M123.55M98.82M94.91M86.66M
Total Liabilities248.74M190.28M149.22M146.12M134.31M
Stockholders Equity189.41M174.43M176.54M186.40M189.50M
Cash Flow
Free Cash Flow30.62M29.02M14.67M21.38M37.98M
Operating Cash Flow49.95M41.01M26.13M31.88M42.40M
Investing Cash Flow-73.24M-34.26M-11.43M-10.49M-4.41M
Financing Cash Flow26.23M-3.72M-13.11M-22.69M-40.83M

K-Bro Linen Technical Analysis

Technical Analysis Sentiment
Positive
Last Price35.08
Price Trends
50DMA
35.09
Negative
100DMA
34.58
Positive
200DMA
35.07
Positive
Market Momentum
MACD
-0.04
Positive
RSI
51.67
Neutral
STOCH
58.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:KBL, the sentiment is Positive. The current price of 35.08 is above the 20-day moving average (MA) of 35.08, below the 50-day MA of 35.09, and above the 200-day MA of 35.07, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 51.67 is Neutral, neither overbought nor oversold. The STOCH value of 58.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:KBL.

K-Bro Linen Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
C$1.75B9.669.65%23.74%-2.58%100.21%
TSDXT
72
Outperform
C$573.88M18.2615.03%3.80%-10.24%-23.79%
TSKBL
72
Outperform
C$452.99M20.579.69%4.69%16.35%3.98%
TSGDI
71
Outperform
C$741.72M19.487.93%1.49%152.09%
TSDCM
71
Outperform
C$99.56M13.8121.19%2.78%-5.30%
TSCGY
67
Neutral
C$557.58M13,251.350.01%3.12%3.03%-99.78%
62
Neutral
C$6.43B7.673.30%3.13%6.91%-13.05%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:KBL
K-Bro Linen
35.08
2.78
8.61%
TSE:DXT
Dexterra Group
9.21
4.08
79.53%
TSE:TCL.B
Transcontinental Inc. Class B
20.64
6.88
50.00%
TSE:GDI
GDI Integrated
31.48
-0.83
-2.57%
TSE:DCM
Data Commun Management
1.80
-0.56
-23.73%
TSE:CGY
Calian Group
49.03
-4.13
-7.77%

K-Bro Linen Corporate Events

Dividends
K-Bro Linen Announces June 2025 Dividend
Positive
Jun 13, 2025

K-Bro Linen Inc. has declared a dividend of 10.00 cents CDN per common share for June 2025, payable on July 15, 2025, to shareholders of record on June 30, 2025. This announcement aligns with the company’s policy of distributing dividends to shareholders of record at the end of each month. The dividend is designated as an eligible dividend under Canadian tax legislation, which may have favorable tax implications for shareholders.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

Private Placements and FinancingM&A Transactions
K-Bro Linen Expands U.K. Presence with Star Mayan Acquisition
Positive
Jun 11, 2025

K-Bro Linen Inc. has completed the acquisition of U.K.-based Star Mayan Limited for £107.2 million, enhancing its presence in the U.K.’s commercial laundry and textile rental sector. This acquisition, funded through a combination of a bought deal financing and a new term loan, aims to integrate Star Mayan with K-Bro’s existing U.K. businesses, Fishers and Shortridge, to create a leading national platform. The move is expected to provide growth opportunities and strengthen K-Bro’s market position in the U.K.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

Shareholder Meetings
K-Bro Linen Inc. Announces AGM Results and Strong Shareholder Support
Positive
Jun 3, 2025

K-Bro Linen Inc. announced the results of its annual general meeting, where shareholders approved all items of business, including the election of directors. The meeting saw a 67.79% participation rate of outstanding shares. This approval reflects strong shareholder support and is likely to positively impact the company’s operations and its position in the industry.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

Private Placements and FinancingM&A Transactions
K-Bro Linen Secures $80 Million for Strategic Acquisition
Positive
May 30, 2025

K-Bro Linen Inc. has successfully closed an $80 million subscription receipt offering, including the full exercise of the over-allotment option. The proceeds will be used to finance the acquisition of STAR Mayan Limited, a leading commercial laundry business in England, enhancing K-Bro’s market position in the healthcare and hospitality sectors. The acquisition is expected to close by June 11, 2025, and the subscription receipts will convert into common shares upon completion. If the acquisition does not close by June 30, 2025, the subscription receipts will be canceled, and investors will receive their funds back.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
K-Bro Linen Files Final Prospectus for $70 Million Public Offering
Positive
May 28, 2025

K-Bro Linen Inc. has filed a final prospectus for its public equity financing of $70,136,500 in subscription receipts, with a potential increase to $80,656,975 if the over-allotment option is fully exercised. This move is part of K-Bro’s strategy to strengthen its financial position and expand its market presence. The prospectus is available on SEDAR+, and the offering is not registered for sale in the United States. This development could enhance K-Bro’s operational capabilities and market positioning, potentially benefiting stakeholders by supporting future growth initiatives.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

M&A TransactionsFinancial Disclosures
K-Bro Linen Reports Record Q1 Results and Acquires UK-Based Star Mayan
Positive
May 13, 2025

K-Bro Linen Inc. reported a strong Q1 2025 with a 13.4% revenue increase to $91 million, driven by growth in both healthcare and hospitality segments. The company announced a transformative acquisition of UK-based Star Mayan, enhancing its market position by creating a top three national platform in the UK. This acquisition is expected to diversify K-Bro’s revenue and strengthen its presence in the UK healthcare market, aligning with trends similar to the Canadian market.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
K-Bro Linen Expands U.K. Presence with Major Acquisition of Star Mayan
Positive
May 13, 2025

K-Bro Linen Inc. has announced the acquisition of U.K.-based Star Mayan Limited for £107 million, significantly enhancing its presence in the U.K.’s commercial laundry market. This acquisition positions K-Bro as a top three national player in the U.K., with a combined market share of approximately 10% in the £1.6 billion industry. The acquisition is expected to diversify K-Bro’s revenue streams, particularly in the healthcare sector, and create significant synergies and operational efficiencies. The move is seen as a strategic step to expand K-Bro’s geographic footprint and enhance its service capabilities in both the healthcare and hospitality markets.

The most recent analyst rating on (TSE:KBL) stock is a Buy with a C$45.00 price target. To see the full list of analyst forecasts on K-Bro Linen stock, see the TSE:KBL Stock Forecast page.

Shareholder Meetings
K-Bro Linen Inc. Announces Virtual 2025 Annual General Meeting
Neutral
May 5, 2025

K-Bro Linen Inc. announced it will hold its Annual General Meeting virtually on June 3, 2025. The meeting will include presentations by the company’s President and CEO, Linda McCurdy, and CFO, Kristie Plaquin. This announcement underscores K-Bro’s commitment to transparency and engagement with its stakeholders, potentially impacting its operations and market positioning within the linen processing industry.

Financial Disclosures
K-Bro Linen to Announce Q1 2025 Financial Results and Host Conference Call
Neutral
Apr 29, 2025

K-Bro Linen Inc. has announced the release date for its Q1 2025 financial results, scheduled for May 14, 2025, after market close. A conference call and webcast will follow on May 15, 2025, to discuss the results, featuring remarks from the company’s President and CEO, Linda McCurdy, and CFO, Kristie Plaquin. This announcement is part of K-Bro’s ongoing efforts to maintain transparency with its stakeholders and provide insights into its financial performance.

Dividends
K-Bro Linen Declares April 2025 Dividend
Positive
Apr 15, 2025

K-Bro Linen Inc. announced a dividend of 10.00 cents CDN per common share for April 2025, payable on May 15, 2025, to shareholders of record on April 30, 2025. This announcement underscores K-Bro’s commitment to providing returns to its shareholders and reinforces its position as a leading player in the laundry and linen processing industry, with implications for continued investor confidence and market stability.

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: Jun 27, 2025