Roots Corporation (ROOT) AI Stock Analysis

• Market Cap: C$135.29M
• Dividend Yield: N/A
• Average Volume (3M): 8.19K
• Price to Earnings (P/E): 14.1
• Beta (1Y): 0.22
• 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): 0.33
• Revenue Forecast (FY): C$283.20M

• Rating: 54 Neutral
• Price Target: C$3.50 ▲(14.75% Upside)
• Action: Reiterated Date: 01/09/26
• Date: Action: Reiterated 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.

High gross margins

Elevated and expanding gross margins signal pricing power, favorable product mix, and sourcing/freight improvements. High DTC margins in particular create structural margin advantages versus wholesale and provide room to invest in marketing while protecting operating profits long term.

Leverage and cash trend improving

Declining net debt and sub‑2x leverage improve financial flexibility and reduce refinancing risk. Coupled with improving free cash flow trends, this supports continued investment in growth initiatives and cushions the balance sheet against seasonal swings 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.

Rising SG&A intensity

Management is adding marketing and personnel, which raises fixed and variable cost run‑rate. If incremental marketing fails to sustainably lift full‑price demand, higher SG&A will compress margins and slow progress toward consistent profitability over multiple quarters.

Elevated inventory & seasonal exposure

A 10% inventory increase ahead of peak season raises markdown and working‑capital risk, especially in a market with ongoing discounting. Excess stock can pressure gross margins and cash flow for several quarters if sell‑through softens or promotional activity persists.

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

Mixed fundamentals: income statement remains weak with negative net income and margin pressure (Income Statement Score 45), partly offset by a manageable leverage profile (Balance Sheet Score 55) and improving free cash flow trends despite losses (Cash Flow Score 60).

Income Statement

Roots Corporation's income statement shows a challenging financial position with negative net profit margins and declining EBIT and EBITDA margins over the TTM period. Despite a slight revenue growth, profitability remains a concern as net income is negative, indicating operational inefficiencies or high costs. The gross profit margin is relatively strong, suggesting potential for improvement if cost controls are implemented.

Balance Sheet

The balance sheet reflects moderate leverage with a debt-to-equity ratio below 1, which is manageable but has increased slightly over the TTM period. The return on equity is negative, highlighting profitability challenges. However, the equity ratio indicates a reasonable level of equity financing, providing some stability.

Cash Flow

Cash flow analysis reveals a positive trajectory in free cash flow growth, although operating cash flow to net income ratio is low due to negative net income. The free cash flow to net income ratio is relatively strong, suggesting that the company is generating cash despite profitability issues, which is a positive sign for liquidity.

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

• Technical Analysis Sentiment: Positive
• Last Price: 3.05
• 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:ROOT, the sentiment is Positive. The current price of 3.05 is below the 20-day moving average (MA) of 3.23, below the 50-day MA of 3.17, and below the 200-day MA of 3.20, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 59.49 is Neutral, neither overbought nor oversold. The STOCH value of 53.81 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
ATZ	71 Outperform	C$13.18B	23.21	29.12%	―	26.51%	172.52%
GIL	64 Neutral	$14.90B	23.55	20.31%	1.47%	6.64%	27.37%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
GOOS	57 Neutral	C$1.45B	3.20	4.23%	―	3.78%	-54.87%
RET	55 Neutral	C$101.09M	30.61	-0.06%	―	-1.95%	-102.54%
CTC	55 Neutral	C$10.01B	16.32	13.16%	3.17%	-0.13%	13.73%
ROOT	54 Neutral	C$135.29M	14.11	-19.60%	―	4.87%	-1195.39%

Roots Corporation Corporate Events

Roots Launches Strategic Review to Explore Value-Maximizing Options

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 board will evaluate options that may include a sale of the company, supported by J.P. Morgan Securities Canada Inc. as financial advisor and Torys LLP as legal counsel.

Management has emphasized that day-to-day operations and commitments to customers, partners, and employees will continue unchanged during the process. The company cautioned that there is no assurance the review will result in any specific transaction, underscoring uncertainty for investors and other stakeholders about the outcome and timing of any potential deal.

The most recent analyst rating on (TSE:ROOT) stock is a Hold with a C$3.00 price target. To see the full list of analyst forecasts on Roots Corporation stock, see the TSE:ROOT Stock Forecast page.

Roots Names Rosie Pouzar Chief Commercial Officer to Drive Next Growth Phase

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 highlighted her mandate to clarify enterprise priorities and speed up decision-making to unlock new growth avenues for the brand.

Pouzar brings extensive retail and operational experience from senior roles at Sephora Canada, Cineplex, and PwC, combining financial discipline with data-driven, customer-centric commercial strategy. Her appointment is intended to strengthen Roots’ commercial capabilities, deepen customer engagement, and support the brand’s next phase of growth in an increasingly competitive global lifestyle market.

The most recent analyst rating on (TSE:ROOT) stock is a Hold with a C$3.00 price target. To see the full list of analyst forecasts on Roots Corporation stock, see the TSE:ROOT Stock Forecast page.

Roots Signs 10-Year Logistics Deal with Metro Supply Chain to Boost Global Distribution

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 facility to Metro’s Ontario site. The long-term deal is intended to leverage Metro Supply Chain’s technology-enabled, data-driven warehousing, fulfillment and automation capabilities to enhance Roots’ omnichannel customer experience, improve logistics efficiency and scalability, and support the lifestyle brand’s global growth ambitions and service to its international customer base.

The most recent analyst rating on (TSE:ROOT) stock is a Hold with a C$3.00 price target. To see the full list of analyst forecasts on Roots Corporation stock, see the TSE:ROOT Stock Forecast page.

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.