Wajax Corporation (WJX) AI Stock Analysis

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Wajax Corporation

(TSX:WJX)

Rating:73Outperform

Price Target:―

Wajax Corporation's overall stock score of 73 reflects a mixed landscape. The company shows strong financial performance with solid profitability and stable leverage, though revenue and net income fluctuations pose challenges. The technical analysis suggests bearish signals with the stock trading below key moving averages. Valuation metrics are attractive, with a low P/E ratio and high dividend yield. The earnings call highlighted positive revenue growth and cost management, but declining gross profit margins and earnings raise concerns. Overall, while there are strengths, challenges remain, warranting a balanced outlook.

Positive Factors

Sector Demand

Demand from the mining and energy sectors is expected to be robust, despite broader market conditions being soft.

Strategic Partnerships

The direct relationship with Hitachi should continue to yield benefits for WJX.

Negative Factors

Financial Performance

Financial performance in 2024 reflected a mix of fading benefits from the post-COVID recovery, sluggish activity levels, and intensifying competitive pressures.

Gross Margin Pressure

Gross margins declined due to increased competitive pressures and unfavorable mix being a headwind.

Leverage Concerns

Leverage is elevated with net debt-to-adjusted EBITDA remaining above the company's targeted range.

Wajax Corporation (WJX) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$506.73M

Dividend Yield5.92%

Average Volume (3M)68.60K

Price to Earnings (P/E)12.4

Beta (1Y)1.10

Revenue Growth-2.65%

EPS Growth-47.65%

CountryCA

Employees2,900

SectorIndustrials

Sector Strength93

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)0.67

Shares Outstanding21,758,627

10 Day Avg. Volume76,596

30 Day Avg. Volume68,597

Financial Highlights & Ratios

PEG Ratio-3.10

Price to Book (P/B)1.01

Price to Sales (P/S)0.00

P/FCF Ratio5.26

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$22.70

Price Target Upside-3.07% Downside

Rating ConsensusHold

Number of Analyst Covering5

Wajax Corporation Business Overview & Revenue Model

Company DescriptionWajax Corporation is a leading Canadian distributor and service provider that operates in three core sectors: Equipment, Power Systems, and Industrial Components. The company offers a wide range of products and services, including heavy equipment for construction and forestry, industrial components for various industries, and power systems for energy needs. Wajax serves diverse sectors such as mining, oil and gas, construction, and manufacturing, providing both sales and after-market support.

How the Company Makes MoneyWajax Corporation generates revenue primarily through the sale and leasing of equipment and machinery, along with providing related services such as maintenance and repair. The company's key revenue streams include the distribution of new and used equipment, sale of industrial components, and provision of power systems. Wajax also earns income from service contracts, parts sales, and technical support services. Strategic partnerships with leading equipment manufacturers and a strong network of suppliers are significant contributors to its earnings, enabling Wajax to offer a comprehensive portfolio of products and solutions to its customers across Canada.

Wajax Corporation Earnings Call Summary

Earnings Call Date:May 05, 2025

(Q1-2025)

% Change Since: 28.40%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While there was strong revenue growth driven by equipment sales and cost efficiency improvements, challenges such as reduced gross margins, declines in industrial parts and ERS sales, and a concerning increase in TRIF rate were notable. The company continues to face headwinds from broader market conditions and uncertainty in tariffs, but it is actively working on strategic priorities to navigate these challenges.

Q1-2025 Updates

Positive Updates

Revenue Growth

Revenue of $555 million increased by $72.6 million, or 15.1%, compared to the first quarter of 2024, driven by higher equipment sales in construction and forestry across all regions and higher mining equipment sales.

Increased Adjusted EBITDA

Adjusted EBITDA of $43.2 million increased by $2.5 million, or 6.2%, from the first quarter of 2024, primarily due to higher sales volumes and cost savings initiatives.

Selling and Administrative Expense Reduction

Selling and administrative expenses as a percentage of revenue decreased to 14.1% from 16.7% in the same period of 2024, due to lower spending on personnel, travel, entertainment, and marketing.

Significant Equipment Sales Increase

Equipment sales increased by $73 million, or 74%, compared to the previous year, driven by higher construction and forestry sales and the delivery of two large mining shovels.

Cash Flow Improvement

Cash flows generated from operating activities were $31.4 million, a significant improvement from the $7.3 million used in operating activities in the same quarter of the prior year.

Negative Updates

Reduced Gross Profit Margin

Gross profit margin decreased to 19.1% in the first quarter of 2025 from 22% in the first quarter of 2024, primarily due to lower margins realized on equipment, industrial parts, and ERS revenue.

Decrease in Industrial Parts Sales

Industrial parts sales decreased by $10 million, or 7%, due primarily to lower sales in Western and Eastern Canada.

ERS Sales Decline

ERS sales decreased by $3 million, or 3%, indicating a decline in demand or competitive pressures in this segment.

Backlog Decrease

Backlog at the end of Q1 decreased by $25.8 million year-over-year, primarily due to lower material handling, ERS, and industrial parts orders.

Increased TRIF Rate

The TRIF (Total Recordable Injury Frequency) rate was 1.30, an increase of 141% from the first quarter of 2024, indicating a deterioration in safety metrics.

Company Guidance

In the 2025 first quarter financial results webcast for Wajax Corporation, significant metrics were covered that highlighted the company's performance and strategic initiatives. The revenue increased by 15.1% year-over-year to $555 million, driven largely by higher equipment sales, particularly in the construction and forestry sectors, aided by a competitive financing program with Hitachi Construction Machinery Americas. Despite this revenue growth, the gross profit margin declined to 19.1%, down 290 basis points from the previous year, although it saw a sequential improvement from the last quarter of 2024. Adjusted EBITDA improved by 6.2% to $43.2 million, supported by higher sales volumes and cost-saving measures. Selling and administrative expenses decreased as a percentage of revenue to 14.1% from 16.7% year-over-year. The company also made strides in inventory reduction, achieving a decrease of $91.5 million from peak levels in 2024, and announced a dividend of $0.35 per share for the second quarter of 2025. Looking forward, the company remains focused on advancing its strategic priorities, while navigating the challenges posed by broader market uncertainties and tariff concerns.

Wajax Corporation Financial Statement Overview

Summary

Wajax Corporation displays a solid financial standing with strong profitability and stable leverage. The income statement shows a strong gross profit margin but indicates some pressure on profitability due to a decline in net income. The balance sheet reveals a moderate debt-to-equity ratio, suggesting a balanced approach to leveraging. Although revenue growth is positive, the decline from 2023 to 2024 raises concerns. The cash flow statement demonstrates recovering operating cash flow, though growth is inconsistent. Overall, vigilance over rising debt levels and strategic financial adjustments are crucial.

Income Statement

Positive

Wajax Corporation's income statement shows a strong gross profit margin, which remains stable over recent years. However, the net profit margin has decreased recently due to a decline in net income, indicating some pressure on profitability. Revenue growth has been positive, but the decline from 2023 to 2024 raises concerns. The absence of EBIT in 2024 is notable, but the EBITDA margin remains healthy, reflecting solid operating performance.

Balance Sheet

Positive

The company's balance sheet reveals a moderate debt-to-equity ratio, reflecting a balanced approach to leveraging. Return on equity is commendable, demonstrating efficient use of equity financing. However, the slight increase in total debt over the years suggests rising financial obligations. The equity ratio indicates a stable capital structure, though vigilance over rising liabilities is warranted.

Cash Flow

Positive

Wajax Corporation's cash flow statement demonstrates a recovering operating cash flow following a negative period in 2023. Free cash flow is positive, indicating strong cash generation capabilities, though growth remains inconsistent. The operating cash flow to net income ratio highlights a positive conversion, yet fluctuations in financing cash flow suggest variable financial strategies.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.17B	2.10B	2.15B	1.96B	1.64B	1.42B
	Gross Profit
410.33M	413.78M	444.19M	390.31M	331.85M	261.96M
	EBIT
110.78M	102.26M	135.51M	114.21M	92.53M	72.51M
	EBITDA
153.74M	156.13M	194.71M	169.69M	147.92M	117.13M
	Net Income Common Stockholders
41.19M	42.79M	80.99M	72.41M	53.25M	31.65M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
0.00	7.35M	0.00	-158.45M	9.99M	6.63M
	Total Assets
1.47B	1.55B	1.47B	1.25B	1.08B	981.39M
	Total Debt
500.87M	548.20M	500.87M	303.04M	321.58M	379.25M
	Net Debt
500.87M	540.85M	500.87M	461.49M	311.59M	372.63M
	Total Liabilities
977.08M	1.04B	977.08M	800.11M	690.93M	655.74M
	Stockholders Equity
496.24M	512.28M	496.24M	449.77M	389.91M	325.65M
Cash Flow		Free Cash Flow
98.69M	60.81M	-98.85M	59.12M	182.81M	108.12M
	Operating Cash Flow
108.66M	69.95M	-89.00M	69.13M	190.15M	118.81M
	Investing Cash Flow
-3.21M	156.00K	-24.63M	-14.35M	-62.58M	-17.64M
	Financing Cash Flow
-107.53M	-61.36M	117.47M	-70.00M	-124.20M	-97.72M

Wajax Corporation Technical Analysis

Technical Analysis Sentiment

Positive

Last Price23.42

Price Trends

50DMA

18.95

Positive

100DMA

19.42

Positive

200DMA

21.15

Positive

Market Momentum

MACD

1.41

Positive

RSI

61.08

Neutral

STOCH

54.30

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WJX, the sentiment is Positive. The current price of 23.42 is above the 20-day moving average (MA) of 21.58, above the 50-day MA of 18.95, and above the 200-day MA of 21.15, indicating a bullish trend. The MACD of 1.41 indicates Positive momentum. The RSI at 61.08 is Neutral, neither overbought nor oversold. The STOCH value of 54.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:WJX.

Wajax Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNR	78 Outperform	$90.49B	20.20	21.81%	2.34%	2.60%	-15.63%
TIH	78 Outperform	C$9.50B	19.25	17.36%	1.68%	10.93%	-3.34%
RBA	78 Outperform	C$27.25B	51.81	7.74%	1.06%	5.58%	27.23%
MTL	77 Outperform	C$1.23B	11.44	10.81%	5.67%	3.28%	-14.21%
WJX	73 Outperform	C$506.73M	12.36	8.09%	5.92%	-2.65%	-47.65%
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%

* Industrials Sector Average

Performance Comparison

TSE:WJX

Wajax Corporation

22.37

-2.09

-8.54%

TSE:RBA

RB Global

144.69

42.89

42.14%

TSE:CNR

Canadian National Railway

145.48

-20.19

-12.19%

TSE:TIH

Toromont Industries

116.95

-1.24

-1.05%

TSE:MTL

Mullen Group

14.22

1.94

15.80%

Wajax Corporation Corporate Events

Business Operations and StrategyFinancial Disclosures

Wajax Corporation Reports 2024 Financial Results Amid Market Challenges

Neutral

Mar 4, 2025

Wajax Corporation reported a challenging 2024 with a 2.6% decline in annual revenue and a decrease in gross profit margin due to weakened market conditions and increased competitive pressures. Despite these challenges, the company managed to generate strong cash flows in the fourth quarter through effective working capital management and cost-saving initiatives, while also reducing its leverage ratio and inventory levels. The company plans to continue focusing on strategic priorities to improve margins and operational efficiency in 2025.

Financial Disclosures

Wajax Corporation to Release 2024 Financial Results on March 4

Neutral

Mar 4, 2025

Wajax Corporation announced that it will release its fourth quarter and annual results for 2024 on March 4, 2025, before 9:30 a.m. ET, a revision from the previously scheduled post-market release on March 3, 2025. This announcement is significant as it aligns with the company’s strategy to provide timely financial information to its stakeholders, potentially impacting investor relations and market perception.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.