Roots Corporation (TSE:ROOT)
TSX:ROOT
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Roots Corporation
(TSX:ROOT)
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Rating:54Neutral
Price Target:
C$3.50
▲(14.75% Upside)
Action:ReiteratedDate:01/09/26
The score is held back primarily by weak profitability in the financial statements and only neutral technicals. This is partly offset by a solid earnings-call backdrop showing revenue growth, margin expansion, improving EBITDA, and declining net debt. Valuation is less supportive given the negative P/E and no dividend yield provided.
Positive Factors
Direct-to-Consumer strength
Sustained DTC and comp-store growth indicates durable customer demand and improving in-store/e‑commerce conversion. This supports higher lifetime value, better margin capture versus wholesale, and a stronger omni‑channel platform that can compound revenue over the next several quarters.
Negative Factors
Weak profitability
Persistent negative net income and eroding EBIT/EBITDA margins highlight structural cost or mix pressures despite revenue growth. Until operating efficiencies or higher full‑price sell‑through materialize, profitability volatility remains a long‑term constraint on free cash generation and returns.
Read all positive and negative factors
Positive Factors
Negative Factors
Direct-to-Consumer strength
Sustained DTC and comp-store growth indicates durable customer demand and improving in-store/e‑commerce conversion. This supports higher lifetime value, better margin capture versus wholesale, and a stronger omni‑channel platform that can compound revenue over the next several quarters.
Read all positive factors
Roots Corporation (ROOT) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$156.86M
Dividend YieldN/A
Average Volume (3M)8.19K
Price to Earnings (P/E)14.1
Beta (1Y)0.27
Revenue Growth4.87%
EPS Growth-1195.39%
CountryCA
Employees1,788
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)0.06
Shares Outstanding39,213,764
10 Day Avg. Volume3,431
30 Day Avg. Volume8,192
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.61
Price to Sales (P/S)0.37
P/FCF Ratio3.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.33
Revenue Forecast (FY)C$283.20M
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 ...
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, supplement...
Roots Corporation Earnings Call Summary
Earnings Call Date:Dec 10, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Apr 09, 2026
Earnings Call Sentiment Positive
The call conveyed solid operational and financial momentum: revenue growth (+6.8%), margin expansion (DTC margin +140 bps), improved adjusted EBITDA and reduced net debt, alongside successful product launches, marketing activations and omnichannel improvements. Headwinds include higher SG&A due to marketing and personnel (+10.6%), a modest decline in reported net income driven by share-based compensation revaluation, inventory buildup (+10.3%), and ongoing market discounting. Management is investing to drive both near-term sales and long-term brand equity, accepting higher marketing spend in the near term. Overall, positive growth and margin trends outweigh the identified challenges, though execution on holiday sales and inventory management will be important going into Q4.Positive Updates
Revenue Growth
Q3 revenue of $71.5 million, a 6.8% increase vs. Q3 2024 ($66.9M). This marks the fifth consecutive quarter of top-line growth.
Negative Updates
Increase in SG&A Expenses
SG&A rose to $38.2 million, up 10.6% vs. $34.5M last year, driven by increased marketing investments (+$2M–$3M expected incremental Q4 spend), higher personnel costs, and higher variable selling costs from stronger sales.
Read all updates
Q3-2025 Updates
Positive
Negative
Revenue Growth
Q3 revenue of $71.5 million, a 6.8% increase vs. Q3 2024 ($66.9M). This marks the fifth consecutive quarter of top-line growth.
Read all positive updates
Company Guidance
The company reiterated that it expects to continue investing behind the brand and the holiday season — specifically adding an incremental $2–3 million of marketing in Q4 — while continuing to test paid media, AI-driven discovery and site personalization; Q3 metrics backing that approach included revenue of $71.5M (+6.8% YoY), DTC sales $56.8M (+4.8%), partners & other $14.6M (+15.3%), comparable sales +6.3% (12.1% on a 2‑year stack), total gross margin 60.8% (+80 bps) and DTC gross margin 65.4% (+140 bps), adjusted EBITDA $7.5M (would be $7.6M excluding DSU revaluation, ~+7% YoY), net income $2.3M ($0.06/sh), SG&A $38.2M (+10.6%), Q3 inventory $66.6M (+10.3%), free cash outflow $4.6M (improved from $6.0M), net debt $44.1M (down 5.9%) and net leverage ~1.9x; management also completed a $1.3M repurchase of 415,000 shares and remains focused on converting holiday traffic into sales while refining next‑year marketing mix.Roots Corporation Financial Statement Overview
Summary
Income Statement
45
Neutral
Balance Sheet
55
Neutral
Cash Flow
60
Neutral
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 273.02M | 262.92M | 262.67M | 272.12M | 273.83M | 240.51M |
| Gross Profit | 159.75M | 157.13M | 152.46M | 156.98M | 162.86M | 139.74M |
| EBITDA | -5.83M | -6.68M | 41.92M | 47.38M | 69.44M | 62.33M |
| Net Income | -31.73M | -33.44M | 1.84M | 6.69M | 22.76M | 13.08M |
Balance Sheet | ||||||
| Total Assets | 318.33M | 329.04M | 369.86M | 391.89M | 393.70M | 390.32M |
| Cash, Cash Equivalents and Short-Term Investments | 7.53M | 34.02M | 28.03M | 31.92M | 34.16M | 9.17M |
| Total Debt | 122.71M | 119.88M | 124.88M | 137.16M | 148.92M | 172.27M |
| Total Liabilities | 174.40M | 169.51M | 179.04M | 203.85M | 207.65M | 226.14M |
| Stockholders Equity | 143.92M | 159.53M | 190.82M | 188.04M | 186.06M | 164.18M |
Cash Flow | ||||||
| Free Cash Flow | 22.56M | 25.63M | 33.86M | 22.95M | 52.06M | 47.50M |
| Operating Cash Flow | 28.54M | 32.33M | 38.70M | 29.30M | 56.47M | 50.92M |
| Investing Cash Flow | -5.99M | -6.70M | -5.13M | -6.35M | -4.41M | -3.96M |
| Financing Cash Flow | -20.35M | -19.64M | -37.45M | -25.19M | -27.06M | -31.52M |
Roots Corporation Technical Analysis
Positive
3.05
Price Trends
3.34
Positive
3.28
Positive
3.24
Positive
Market Momentum
0.20
Negative
70.05
Negative
87.78
Negative
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 3.66, below the 50-day MA of 3.34, and below the 200-day MA of 3.24, indicating a bullish trend. The MACD of 0.20 indicates Negative momentum. The RSI at 70.05 is Negative, neither overbought nor oversold. The STOCH value of 87.78 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ROOT.
Roots Corporation Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | C$13.27B | 23.21 | 29.12% | ― | 26.51% | 172.52% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | C$13.91B | 23.55 | 20.31% | 1.47% | 6.64% | 27.37% | |
58 Neutral | C$1.42B | 3.20 | 4.23% | ― | 3.78% | -54.87% | |
55 Neutral | C$97.60M | 30.61 | -0.06% | ― | -1.95% | -102.54% | |
55 Neutral | C$10.09B | 16.32 | 13.16% | 3.17% | -0.13% | 13.73% | |
54 Neutral | C$156.86M | 14.11 | -21.42% | ― | 4.87% | -1195.39% |
* Consumer Cyclical Sector Average
TSE:ROOT
Roots Corporation
4.00
1.82
83.49%
TSE:GIL
Gildan Activewear
75.12
22.35
42.36%
TSE:RET
Reitmans (Canada)
2.18
-0.18
-7.63%
TSE:CTC
Canadian Tire
214.87
11.75
5.79%
TSE:GOOS
Canada Goose Holdings
14.61
4.82
49.23%
TSE:ATZ
Aritzia
114.13
75.55
195.83%
Roots Corporation Corporate Events
Business Operations and StrategyM&A Transactions
Roots Launches Strategic Review to Explore Value-Maximizing Options
Neutral
Mar 3, 2026
Roots Corporation has launched a review of strategic alternatives aimed at maximizing shareholder value, signaling potential changes to its ownership or structure while it continues to run its global lifestyle retail and e-commerce operations. The...
Business Operations and StrategyExecutive/Board Changes
Roots Names Rosie Pouzar Chief Commercial Officer to Drive Next Growth Phase
Positive
Feb 23, 2026
Roots Corporation has appointed Rosie Pouzar as Chief Commercial Officer, elevating her from her previous role as Head of Omnichannel Growth as the company sharpens its focus on scaling its premium outdoor lifestyle business. Management highlighte...
Business Operations and Strategy
Roots Signs 10-Year Logistics Deal with Metro Supply Chain to Boost Global Distribution
Positive
Jan 20, 2026
Roots Corporation has entered a 10-year strategic distribution partnership with Metro Supply Chain, Canada’s leading privately owned third-party logistics provider, under which Roots will shift its distribution operations from a company-run ...
Business Operations and StrategyFinancial Disclosures
Roots Corporation Reports Strong Q3 2025 Financial Results
Positive
Dec 10, 2025
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 ...
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.