Reko International (REKO) AI Stock Analysis

• Market Cap: C$22.41M
• Dividend Yield: N/A
• Average Volume (3M): 443.00
• Price to Earnings (P/E): 15.3
• Beta (1Y): -0.31
• Revenue Growth: 0.38%
• EPS Growth: N/A
• Country: CA
• Employees: 400
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.07
• Shares Outstanding: 5,485,013
• 10 Day Avg. Volume: 50
• 30 Day Avg. Volume: 443
• PEG Ratio: -0.15
• Price to Book (P/B): 0.48
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 2.72
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: C$4.50 ▲(22.95% Upside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 03/06/26

The score is driven primarily by improving profitability and a conservatively financed balance sheet, tempered by thin margins, weak multi-year revenue trajectory, and negative TTM free cash flow. Technicals are mildly positive with price above major moving averages, and valuation is supported by a reasonable P/E and strong dividend yield.

Positive Factors

Conservative balance sheet

A low debt-to-equity ratio and a sizable equity base provide durable financial flexibility, allowing Reko to fund operations, absorb cyclical weakness, and pursue selective investment or contract-backed capex without straining liquidity. This supports long-term solvency and countercyclical stability.

Profitability recovery

A return to positive net income and better operating profit versus the prior-year loss indicates operational improvements and cost control that can be sustained. Re-established profitability creates headroom for reinvestment, contract retention, and gradual margin improvement over several quarters.

Strong operating cash flow

Operating cash flow exceeding reported earnings demonstrates earnings quality and cash-generative operations. This durable cash generation underpins working-capital needs, supports servicing of obligations, and provides a foundation for reinvestment or selective share/ dividend policy when sustained.

Negative Factors

Declining revenue trend

A multi-year decline in revenue signals structural demand or market-share weaknesses that undermine scale economics. Persistent top-line deterioration constrains the company's ability to lift margins, spread fixed costs, and invest in product/market development, raising long-term growth risk.

Thin margins

Low gross and net margins leave limited buffer against input-cost inflation or pricing pressure from large industrial customers. Thin margin structure reduces retained earnings and ROE, limiting internal funding for R&D, tooling, or capacity expansion and making results sensitive to demand swings.

Negative trailing free cash flow

A swing to negative trailing free cash flow after a strong prior year suggests volatile capex or working-capital needs. Persistent FCF deficits would force external financing or asset sales, restricting strategic flexibility and potentially delaying investments that underpin long-term competitiveness.

Reko International Business Overview & Revenue Model

Company Description

Reko International (REKO) is a leading provider of innovative manufacturing solutions, specializing in the design and production of high-precision components and assemblies for various industries, including automotive, aerospace, and industrial sectors. The company leverages advanced technology and engineering expertise to deliver customized products, ensuring quality and efficiency in its operations.

How the Company Makes Money

Reko International generates revenue primarily through the manufacturing and sale of precision components and assemblies. The company operates on a business-to-business model, securing contracts with major corporations in the automotive and aerospace sectors, among others. Key revenue streams include the production of custom-designed parts, tooling, and engineering services. Additionally, Reko benefits from long-term partnerships with well-established companies in its target markets, which provide a steady flow of orders and enhance its market presence. The company also focuses on continuous improvement and innovation, allowing it to command premium pricing for its specialized products and services.

Reko International Financial Statement Overview

Summary

Earnings have rebounded with positive TTM net income (1.4M) and improved operating profit versus the 2024 loss, and leverage is low (debt-to-equity ~0.15). Offsetting this, revenue has generally trended down since 2022, margins are thin (gross ~16%, net ~2.6%), ROE remains low (~2–3%), and TTM free cash flow turned negative (-0.7M).

Income Statement

TTM (Trailing-Twelve-Months) profitability is positive, with net income of 1.4M and improved operating profit versus the 2024 annual loss, indicating a recovery. However, growth remains a key weakness: revenue has generally trended down since 2022 and is down in TTM, and margins are modest (gross margin ~16% and net margin ~2.6% in TTM), leaving less cushion if demand or pricing weakens.

Balance Sheet

The balance sheet looks relatively stable and conservatively financed, with low leverage in TTM (debt-to-equity ~0.15) and a sizable equity base (equity ~41.8M vs. assets ~53.1M). The main limitation is that returns on equity are low (ROE ~2–3% recently, negative in 2024), suggesting the company is not yet generating strong earnings power on its capital base despite improving results.

Cash Flow

Cash generation is mixed. TTM operating cash flow is positive (4.8M) and exceeds net income (coverage ~1.23x), which supports earnings quality, but free cash flow turned negative in TTM (-0.7M) after a very strong 2025 annual level (7.5M). This swing suggests elevated investment or working-capital needs and adds volatility to near-term financial flexibility.

Breakdown	TTM	Jul 2025	Jul 2024	Jul 2023	Jul 2022	Jul 2021
Income Statement
Total Revenue	40.35M	42.15M	44.28M	46.75M	53.88M	39.20M
Gross Profit	6.67M	7.20M	4.85M	7.09M	8.73M	4.83M
EBITDA	5.30M	4.76M	3.03M	5.52M	6.33M	4.19M
Net Income	1.41M	1.04M	-3.89M	1.32M	2.12M	864.00K
Balance Sheet
Total Assets	53.07M	56.92M	58.03M	62.79M	66.89M	62.36M
Cash, Cash Equivalents and Short-Term Investments	13.01M	18.00M	11.43M	12.14M	14.02M	10.71M
Total Debt	5.91M	9.40M	10.96M	12.06M	12.97M	9.08M
Total Liabilities	11.28M	14.71M	16.65M	16.88M	20.48M	15.30M
Stockholders Equity	41.78M	42.21M	41.38M	45.91M	46.41M	47.06M
Cash Flow
Free Cash Flow	-685.00K	7.52M	1.02M	1.04M	2.44M	2.69M
Operating Cash Flow	4.85M	10.40M	3.24M	4.47M	7.80M	5.78M
Investing Cash Flow	-4.56M	-2.04M	-1.81M	-3.10M	-788.00K	-2.76M
Financing Cash Flow	-5.45M	-1.81M	-2.13M	-3.26M	797.00K	-1.25M

Reko International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:REKO, the sentiment is Positive. The current price of 3.66 is below the 20-day moving average (MA) of 3.98, below the 50-day MA of 4.05, and below the 200-day MA of 3.79, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 58.69 is Neutral, neither overbought nor oversold. The STOCH value of 54.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:REKO.

Reko International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REKO	65 Neutral	C$22.41M	15.29	3.19%	―	0.38%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
PYR	46 Neutral	C$117.62M	-5.08	―	―	-6.83%	46.97%
DYA	43 Neutral	C$53.37M	-8.74	-2067.79%	―	-48.39%	9.17%
ENW	43 Neutral	C$33.83M	-9.73	-5.73%	―	69.04%	80.18%
TLA	42 Neutral	C$13.40M	-10.71	-2.57%	―	-1.50%	-180.73%
NXH	40 Underperform	C$39.41M	29.08	―	―	46.49%	42.37%

Reko International Corporate Events

Reko International Lifts Profit Despite Lower Q2 Sales and Macro Headwinds

Reko International reported second-quarter fiscal 2026 sales of $10.2 million, down 5.8% from a year earlier, as lower volumes and earlier-stage project timing reduced recognized revenue. Despite the top-line decline, net income rose 20.4% to $377,000, or $0.07 per share, helped by favourable project mix, labour cost savings and tax items, with adjusted earnings per share at $0.08 versus $0.05.

The company deployed significant capital over the first half of the year, including a $2.7 million mortgage repayment, $2.2 million in growth-related capital expenditures and a $1.1 million dividend, signalling continued investment alongside shareholder returns. Management highlighted ongoing macroeconomic headwinds but stressed its focus on controllable factors such as efficiency gains, cost management and disciplined execution to strengthen Reko’s competitive position and build a more resilient organization.

The most recent analyst rating on (TSE:REKO) stock is a Hold with a C$4.00 price target. To see the full list of analyst forecasts on Reko International stock, see the TSE:REKO Stock Forecast page.