Reko International (REKO) AI Stock Analysis

• Market Cap: C$20.66M
• Dividend Yield: N/A
• Average Volume (3M): 156.00
• Price to Earnings (P/E): ―
• Beta (1Y): -0.31
• Revenue Growth: -12.65%
• EPS Growth: -838.74%
• Country: CA
• Employees: 400
• Sector: Industrials
• Sector Strength: 78
• Industry: Industrial - Machinery
• EPS (TTM): -0.06
• Shares Outstanding: 5,508,813
• 10 Day Avg. Volume: 470
• 30 Day Avg. Volume: 156
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: C$4.00
• Price Target Upside: 6.67% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 59 Neutral
• Price Target: C$4.00 ▲(6.67% Upside)

Reko International's overall stock score is primarily influenced by its financial performance, which highlights profitability challenges despite strong cash flow and a stable balance sheet. Technical analysis indicates potential stabilization, but valuation concerns due to a negative P/E ratio weigh on the score.

Reko International Business Overview & Revenue Model

Company Description

Reko International Group Inc. is a Canadian-based company operating in the manufacturing sector, specializing in precision machining, tooling, and automation solutions. The company primarily serves the automotive, aerospace, and consumer product industries, providing a range of products and services including custom machining, automation systems, and engineered solutions. With a focus on innovation and quality, Reko International has established itself as a reliable partner for clients seeking efficiency and technological advancement in their production processes.

How the Company Makes Money

Reko International generates revenue through the design, engineering, and manufacturing of customized automation solutions and precision machining tools. The company's key revenue streams include the sale of automated assembly and testing equipment, specialized machining services, and custom tooling products. Reko International also benefits from long-term contracts with major clients in the automotive and aerospace industries, which contribute to a stable revenue base. Additionally, the company engages in strategic partnerships and collaborations to enhance its technological capabilities and market reach, further driving its earnings.

Reko International Financial Statement Overview

Summary

Reko International faces financial challenges, with declining revenue and profitability as indicated by a negative net profit margin and EBIT margin. However, the company maintains a strong balance sheet with low debt and a high equity ratio, providing stability. The cash flow is robust, showing improved cash generation despite income statement struggles.

Income Statement

The income statement reveals a challenging environment for Reko International. The TTM (Trailing-Twelve-Months) shows a negative net profit margin of -8.44%, indicating profitability issues. The gross profit margin stands at 15.43%, reflecting modest efficiency in production costs. Revenue has decreased by 8.77% compared to the previous year, highlighting a decline in sales performance. The EBIT margin is negative at -0.75%, denoting operational struggles, although the EBITDA margin of 8.96% suggests some degree of operational cash flow resilience. Overall, the income statement indicates financial instability with declining revenue and profitability.

Balance Sheet

The balance sheet presents a mixed picture for Reko International. The debt-to-equity ratio of 0.24 is relatively low, indicating conservative leverage levels. However, the return on equity is negative at -8.27% in the TTM, reflecting poor profitability relative to shareholder investments. The equity ratio of 71.05% suggests a strong capital structure, providing a cushion for financial stability. Overall, while the company maintains a solid equity base and low leverage, the poor return on equity is concerning for long-term value generation.

Cash Flow

Reko International's cash flow statement shows positive signs. The TTM free cash flow of 13.81 million CAD represents a significant increase from the previous period, indicating improved cash generation. The operating cash flow to net income ratio is robust at -4.26, suggesting efficient conversion of accounting earnings to cash, despite the negative net income. The free cash flow to net income ratio is also strong at -4.05, demonstrating effective cash management. Overall, Reko's cash flows are strong, providing liquidity and operational flexibility despite the income statement challenges.

Breakdown	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	44.28M	46.75M	53.88M	39.20M	40.23M
Gross Profit	4.85M	7.09M	8.73M	4.83M	4.44M
EBITDA	3.03M	5.52M	6.33M	4.19M	5.27M
Net Income	-3.89M	1.32M	2.12M	864.00K	763.00K
Balance Sheet
Total Assets	58.03M	62.79M	66.89M	62.36M	61.30M
Cash, Cash Equivalents and Short-Term Investments	11.43M	12.14M	14.02M	10.71M	9.44M
Total Debt	10.96M	12.06M	12.97M	9.08M	9.52M
Total Liabilities	16.65M	16.88M	20.48M	15.30M	14.39M
Stockholders Equity	41.38M	45.91M	46.41M	47.06M	46.91M
Cash Flow
Free Cash Flow	1.02M	1.04M	2.44M	2.69M	4.97M
Operating Cash Flow	3.24M	4.47M	7.80M	5.78M	6.66M
Investing Cash Flow	-1.81M	-3.10M	-788.00K	-2.76M	-6.56M
Financing Cash Flow	-2.13M	-3.26M	797.00K	-1.25M	-1.10M

Reko International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3.75
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 3.75 is above the 20-day moving average (MA) of 3.71, above the 50-day MA of 3.72, and above the 200-day MA of 3.48, indicating a bullish trend. The MACD of 0.01 indicates Negative momentum. The RSI at 88.78 is Negative, neither overbought nor oversold. The STOCH value of 50.00 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
Sector *	61 Neutral	C$7.19B	-4.76	-4.20%	2.32%	13.56%	-31.48%
TLA	60 Neutral	C$13.83M	20.41	4.15%	―	0.89%	―
REKO	59 Neutral	C$20.66M	―	-7.92%	―	-12.65%	-838.74%
ENW	56 Neutral	C$48.37M	390.91	-10.19%	―	89.54%	―
DYA	53 Neutral	C$66.08M	―	-1898.77%	―	408.78%	-20.74%
PYR	41 Neutral	C$67.51M	―	-5701.32%	―	0.58%	45.10%
NXH	41 Neutral	C$11.57M	―	-525.98%	―	-24.60%	-11.26%

Reko International Corporate Events

Reko International Reports Q3 Sales Growth Amid Economic Challenges

Reko International Group Inc., facing economic challenges, reported a 7.7% increase in third-quarter sales compared to the previous year, despite a year-to-date sales decline of 11% due to reduced project volumes in the automotive sector. The company improved its gross profit margin significantly to 17.1% from 4.4% by executing fixed-price contracts more effectively and adopting a selective market strategy. However, restructuring costs impacted earnings per share negatively. Reko’s strategic restructuring aims to align its cost base with current economic conditions and position the company for long-term growth.