Today, four companies in the S&P/TSX composite index are scheduled to release their quarterly results.
They are: Vermillion Energy Inc. (VET-T), Chemtrade Logistics Income Fund (CHE.un-T), Canadian Apartment Properties REIT (CAR.un-T), and PrairieSky Royalty Ltd. (PSK-T).
In terms of economic reports, there are no key Canadian or U.S. economic releases scheduled for today.
Briefly recapping Friday's stock market returns, U.S. stock markets closed in fairly neutral territory, while the Canadian stock market plunged.
In the U.S., the Dow Jones Industrial Average increased 0.05 per cent, the S&P 500 index gained 0.15 per cent, and the Nasdaq composite index added 0.17 per cent.
Turning to Canada, the S&P/TSX composite index fell 248 points, or 1.57 per cent with every single sector closing lower led by a 2.5 per cent loss in the energy sector. There were just 29 securities in the TSX Index that advanced, 218 securities declined in value, and two stocks closed the day unchanged.
The TSX Index is up 1.61 per cent year-to-date.
On today's TSX Breakouts report, there are just 10 stocks on the positive breakouts list (stocks with positive price momentum), and 47 stocks are on the negative breakouts list (stocks with negative price momentum).
Discussed today is a company that is a triple threat – realizing revenue and earnings growth, management recently raised its guidance, and the stock has delivered dividend growth, declaring a 30-per-cent dividend increase several months ago. The company highlighted today Savaria Corp. (SIS-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Quebec-based Savaria has two core operating divisions. The Accessibility segment, which manufactures and markets stairlifts, wheelchair lifts, and elevators for residential and commercial use, and the Adapted Vehicles segment, which reconfigures minivans to make them wheelchair accessible. In terms of geographic revenue breakdown, for the first nine months of 2016, 51 per cent of the company's total revenue was from the U.S., 41 per cent was from Canada, and 8 per cent was derived outside of North America.
On Nov. 2, the company reported better-than-expected third quarter financial results. Revenue was $32.4-million, up 35 per cent year-over-year and exceeding the consensus estimate of $31.1-million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $5.6-million, above the Street's forecast of $5.1-million.
Management raised its guidance, forecasting revenue of approximately $119-million in 2016, and adjusted EBITDA of between $19-million and $20-million.
Dividend policy
Management is committed to returning capital to its shareholders.
On Nov. 2, the company declared a 30 per cent increase to its quarterly dividend, raising it to 6.5 cents per share from 5 cents per share. This equates to 26 cents on a yearly basis, or an annualized dividend yield of 2.5 per cent.
The previous year, in November 2015, the company announced a 25 per cent dividend hike.
Financial Forecasts
The Street is forecasting steady growth for the company. The consensus revenue estimate is $121-million in 2016, $146-million in 2017, rising to $170-million in 2018. The consensus EBITDA estimates are $19.6-million in 2016, $26.4-million in 2017, and $33.1-million in 2018. The consensus earnings per share (EPS) estimates are 35 cents in 2016, rising to 48 cents the following year, and anticipated to reach 60 cents in 2018.
Financial forecasts have been relatively steady. Six months ago, the consensus EBITDA estimates were $19-millon for 2016 and $25.5-million for 2017. The consensus EPS forecasts were 35 cents for 2016 and 47 cents for the following year.
Valuation
According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 10.4 times the consensus 2018 estimate. Looking back over several years, to May 2014, this is close to its historical average multiple of 9.9 times.
The consensus one-year target price is $13.30, suggesting a potential price return of 30 per cent over the next 12 months. Target prices range from a low of $12.50 (at PI Financial Corp.) to a high of $14.50 (at GMP). Individual target prices are as follows in numerical order: $12.50, two at $13, $13.50, and $14.50.
Analysts' recommendations
Five analysts cover the company and all five have "buy" recommendations.
The five firms providing research coverage are as follows in alphabetical order: Cormark Securities, GMP, Laurentian Bank Securities, National Bank Financial, and PI Financial Corp.
Analysts' recommendation revisions
Three analysts have recently increased their target prices. In February, Nick Agostino from Laurentian Bank Securities, increased his target price to $13 from $12.50. Last month, Maggie Macdougall from Cormark Securities bumped her target price by $1 to $13.50. Finally, Leon Aghazarian from National Bank Financial, took his target price up to $13 from his previous target price of $12.50.
Insider transaction activity
So far this year, there has been no insider transaction activity recorded on the System for Electronic Disclosure by Insiders (SEDI).
Chart watch
Year to date, the share price is down 5.5 per cent. Much of this lost has been realized over the past three trading sessions with the share price declining 5.4 per cent, closing at $10.27 on Feb. 24, down from a closing price of $10.86 on Feb. 21. In addition, the stock price has fallen over the past few days on slightly higher-than-normal trading volume. For instance, the two month historical daily average trading volume is approximately 79,000 shares, and last Thursday, nearly 158,000 shares traded.
The relative strength index reading is at 30, suggesting the shares are entering oversold territory. Generally, a reading at or below 30 reflects an oversold condition.
The stock price is approaching strong technical support at $10, which is close to its 200-day moving average (at $10.06). Failing that, there is support around $9 and strong support at $8.
On a recovery, there is overhead resistance around $11, close to its 50-day moving average (at $10.93).
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The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.