Roots Corporation (ROOT) AI Stock Analysis

• Market Cap: C$122.35M
• Dividend Yield: N/A
• Average Volume (3M): 8.19K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.29
• Revenue Growth: 4.87%
• EPS Growth: -1195.39%
• Country: CA
• Employees: 1,788
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.06
• Shares Outstanding: 39,213,764
• 10 Day Avg. Volume: 3,431
• 30 Day Avg. Volume: 8,192
• PEG Ratio: <0.01
• Price to Book (P/B): 0.61
• Price to Sales (P/S): 0.37
• P/FCF Ratio: 3.80
• 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: 48 Neutral
• Price Target: C$3.00 ▼(-1.64% Downside)

The score is held back primarily by weak financial performance driven by ongoing losses and margin pressure, and by soft technical momentum (negative MACD and trading below key moving averages). Cash flow trends and a manageable leverage profile provide some offset, but valuation remains constrained by unprofitability and no stated dividend yield.

Positive Factors

Brand and product durability

Roots' long heritage and focus on craftsmanship and sustainability build durable brand equity. This loyalty supports repeat purchases and premium positioning, helping stabilize revenues versus fast-fashion peers and providing a durable foundation for margins and long-term customer lifetime value.

Omnichannel revenue mix and partnerships

An omnichannel model—bricks-and-mortar store footprint plus e-commerce—and strategic collaborations diversify revenue and distribution. That reduces single-channel risk, broadens customer reach across cohorts, and supports steadier sales and inventory turnover over the medium term.

Improving free cash flow trajectory

Despite unprofitability, improving free cash flow indicates the business can generate cash from operations. Durable cash generation enhances liquidity, finances capex or marketing investments, and creates runway to deleverage or invest in margin-enhancing initiatives without immediate external funding.

Negative Factors

Negative profitability and shrinking margins

Persistently negative net income and falling EBIT/EBITDA margins point to structural profitability issues. Operating inefficiencies or pricing pressure may be embedded in the cost base; without sustained margin recovery the firm will struggle to self-fund growth or generate acceptable returns for shareholders.

Negative ROE and rising leverage

A negative ROE means capital is not earning returns and recent slight leverage increases reduce financial flexibility. This combination limits the company's ability to fund strategic initiatives, increases refinancing risk in adverse cycles, and constrains long-term capital allocation choices.

Modest revenue growth and limited scale

Revenue growth near 5% and a relatively small operational footprint point to constrained scale. Limited scale can impede operating leverage, slow margin recovery, and make international expansion or meaningful omnichannel investment more costly and risky relative to larger apparel peers.

Roots Corporation Business Overview & Revenue Model

Company Description

Roots Corporation (ROOT) is a Canadian lifestyle brand that specializes in high-quality apparel, leather goods, and accessories inspired by the outdoors and Canadian heritage. Founded in 1973, the company operates in the retail sector, offering a wide range of products including clothing for men, women, and children, as well as footwear and home products. Roots is known for its commitment to craftsmanship and sustainability, with a focus on creating durable products that resonate with consumers who value both style and functionality.

How the Company Makes Money

Roots Corporation generates revenue primarily through its retail and e-commerce channels. The company sells its products directly to consumers through a network of branded retail stores across Canada and in select international markets, supplemented by its online platform, which allows for broader reach and convenience. Key revenue streams include sales of apparel, leather goods, and accessories. Additionally, Roots benefits from strategic partnerships that enhance its brand visibility and product offerings, such as collaborations with other fashion and lifestyle brands. The company's focus on seasonal collections and limited-edition products also helps drive consumer interest and sales, contributing to its overall earnings.

Roots Corporation Financial Statement Overview

Summary

Roots Corporation faces profitability challenges despite a strong gross profit margin. The balance sheet shows moderate leverage, but the negative return on equity is concerning. Cash flow trends are slightly positive with growth in free cash flow, but profitability issues need addressing.

Income Statement

Roots Corporation's income statement shows a mixed performance. The TTM data indicates a slight revenue growth of 1.14%, but the company is struggling with profitability, as evidenced by a negative net profit margin of -12.23% and a negative EBIT margin of -13.25%. The gross profit margin remains healthy at 60.13%, suggesting efficient cost management at the production level. However, the negative EBITDA margin highlights challenges in covering operating expenses.

Balance Sheet

The balance sheet reflects moderate financial stability. The debt-to-equity ratio of 0.75 indicates a balanced approach to leveraging, but the negative return on equity of -19.55% suggests that the company is not generating sufficient returns on shareholders' equity. The equity ratio stands at 47.29%, indicating a reasonable proportion of equity financing relative to total assets.

Cash Flow

Cash flow analysis reveals some positive trends, with a free cash flow growth rate of 8.11% in the TTM period. The operating cash flow to net income ratio is 0.53, indicating that operating cash flows are covering net income. However, the free cash flow to net income ratio of 0.75 suggests that while free cash flow is positive, it is not fully covering the net losses.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	262.92M	262.67M	272.12M	273.83M	240.51M
Gross Profit	157.13M	152.46M	156.98M	162.86M	139.74M
EBITDA	-6.68M	41.92M	47.38M	69.44M	62.33M
Net Income	-33.44M	1.84M	6.69M	22.76M	13.08M
Balance Sheet
Total Assets	329.04M	369.86M	391.89M	393.70M	390.32M
Cash, Cash Equivalents and Short-Term Investments	34.02M	28.03M	31.92M	34.16M	9.17M
Total Debt	119.88M	124.88M	137.16M	148.92M	172.27M
Total Liabilities	169.51M	179.04M	203.85M	207.65M	226.14M
Stockholders Equity	159.53M	190.82M	188.04M	186.06M	164.18M
Cash Flow
Free Cash Flow	25.63M	33.86M	22.95M	52.06M	47.50M
Operating Cash Flow	32.33M	38.70M	29.30M	56.47M	50.92M
Investing Cash Flow	-6.70M	-5.13M	-6.35M	-4.41M	-3.96M
Financing Cash Flow	-19.64M	-37.45M	-25.19M	-27.06M	-31.52M

Roots Corporation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3.05
• 50DMA: Negative
• 100DMA: Negative
• 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:ROOT, the sentiment is Positive. The current price of 3.05 is below the 20-day moving average (MA) of 3.12, below the 50-day MA of 3.23, and below the 200-day MA of 3.08, indicating a neutral trend. The MACD of -0.04 indicates Negative momentum. The RSI at 47.00 is Neutral, neither overbought nor oversold. The STOCH value of 53.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ROOT.

Roots Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GIL	75 Outperform	C$16.31B	20.18	31.12%	1.47%	6.64%	27.37%
ATZ	75 Outperform	C$15.17B	41.32	30.09%	―	26.51%	172.52%
GOOS	66 Neutral	$1.83B	68.57	6.07%	―	3.78%	-54.87%
CTC	64 Neutral	C$9.41B	15.76	13.16%	3.17%	-0.13%	13.73%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
RET	55 Neutral	C$115.16M	-297.62	-0.06%	―	-1.95%	-102.54%
ROOT	48 Neutral	C$122.35M	-3.98	-19.60%	―	4.87%	-1195.39%

Roots Corporation Corporate Events

Roots Corporation Reports Strong Q3 2025 Financial Results

Roots Corporation reported strong financial results for the third quarter of fiscal 2025, with a 6.8% increase in total sales compared to the previous year. The company’s growth was driven by enhanced marketing efforts and improved in-store execution, which led to a positive consumer response. Despite a slight decrease in net income, the company maintained a strong gross margin and reduced net debt by 5.9% year-over-year. The results reflect Roots’ strategic focus on long-term value creation and its ability to sustain positive sales momentum in a dynamic retail environment.

The most recent analyst rating on (TSE:ROOT) stock is a Hold with a C$3.50 price target. To see the full list of analyst forecasts on Roots Corporation stock, see the TSE:ROOT Stock Forecast page.