Wajax Corporation (WJX) AI Stock Analysis

96 Followers

Top Page

Wajax Corporation

(TSX:WJX)

72Outperform

Wajax Corporation's overall stock score reflects its strong financial foundation and attractive valuation, but is tempered by bearish technical indicators and mixed earnings call results. The company's ability to manage market pressures and improve profitability will be key to future performance.

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

Debt Levels

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

Earnings Risk

The near-term risk to earnings appears weighted to the downside and a catalyst for a potential valuation re-rating isn't clear.

Margin Pressure

Margin pressure intensifies as gross margins compressed driven by increased competitive pressures and a less favourable mix.

Wajax Corporation (WJX) vs. S&P 500 (SPY)

Market Cap

C$370.41M

Dividend Yield8.19%

Average Volume (3M)96.05K

Price to Earnings (P/E)8.7

Beta (1Y)1.00

Revenue Growth-2.65%

EPS Growth-47.65%

CountryCA

Employees3,000

SectorIndustrials

Sector Strength70

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)1.97

Shares Outstanding21,795,916

10 Day Avg. Volume108,890

30 Day Avg. Volume96,054

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.18

Price to Cash Flow (P/CF)1.30

P/FCF Ratio1.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$22.00

Price Target Upside33.25% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

Wajax Corporation Business Overview & Revenue Model

Company DescriptionWajax Corporation (WJX) is a leading Canadian distributor and service provider offering a diverse range of industrial products and services. It operates across various sectors including construction, forestry, mining, oil and gas, and manufacturing. Wajax provides equipment, power systems, and industrial components, and also offers comprehensive maintenance and repair services aimed at enhancing the operational efficiency of its clients.

How the Company Makes MoneyWajax Corporation generates revenue through the sale and distribution of equipment, parts, and industrial products, as well as through its service offerings. The company's key revenue streams include equipment sales, which encompass heavy machinery and power systems tailored for specific industry needs. Additionally, Wajax earns income from providing maintenance, repair, and overhaul services, ensuring the longevity and operational efficiency of the equipment they sell. The company also benefits from a network of partnerships with leading manufacturers, which enables it to offer a wide array of products and solutions to its customers. Critical factors contributing to Wajax's earnings include its extensive service network, strategic partnerships, and its ability to provide customized solutions that meet the specific demands of its diverse clientele.

Wajax Corporation Financial Statement Overview

Summary

Wajax Corporation demonstrates robust financial health with strong profitability and stable leverage. Despite challenges in revenue growth and net income fluctuations, the company maintains a healthy operating cash flow, though rising debt levels require attention.

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.

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

Wajax Corporation Technical Analysis

Technical Analysis Sentiment

Negative

Last Price16.51

Price Trends

50DMA

18.45

Negative

100DMA

19.83

Negative

200DMA

21.84

Negative

Market Momentum

MACD

-0.44

Negative

RSI

41.67

Neutral

STOCH

50.94

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WJX, the sentiment is Negative. The current price of 16.51 is below the 20-day moving average (MA) of 17.25, below the 50-day MA of 18.45, and below the 200-day MA of 21.84, indicating a bearish trend. The MACD of -0.44 indicates Negative momentum. The RSI at 41.67 is Neutral, neither overbought nor oversold. The STOCH value of 50.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:WJX.

Wajax Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RBA	76 Outperform	C$24.53B	48.09	7.71%	1.20%	18.26%	141.71%
TIH	74 Outperform	C$9.41B	18.76	17.96%	1.76%	8.28%	-3.92%
MTL	73 Outperform	C$1.11B	9.92	11.27%	6.61%	-0.27%	-15.99%
WJX	72 Outperform	C$370.41M	8.67	8.49%	8.19%	-2.65%	-47.65%
CNR	71 Outperform	C$83.93B	19.09	21.72%	2.57%	1.30%	-18.15%
Sector *	62 Neutral	$7.50B	12.89	3.19%	3.38%	3.64%	-14.27%

* Industrials Sector Average

Performance Comparison

TSE:WJX

Wajax Corporation

16.51

-13.80

-45.53%

TSE:RBA

RB Global

134.88

35.52

35.75%

TSE:CNR

Canadian National Railway

138.53

-34.57

-19.97%

TSE:TIH

Toromont Industries

113.71

-13.09

-10.32%

TSE:MTL

Mullen Group Ltd.

12.40

-1.48

-10.66%

Wajax Corporation Earnings Call Summary

Earnings Call Date: Mar 4, 2025 | % Change Since: -14.28% | Next Earnings Date: May 5, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with positive developments in revenue growth, cost reductions, and inventory management being offset by challenges such as reduced gross profit margins, a significant decline in ERS sales, and lower adjusted EBITDA and net earnings. While there are some positive trends, the balance of highlights and lowlights suggests a cautious outlook.

Highlights

Revenue Growth

Revenue increased by $23.3 million in Q4 2024, primarily driven by higher mining equipment sales in Western Canada.

Reduction in Selling and Administrative Expenses

Selling and administrative expenses as a percentage of revenue decreased to 14.1% in Q4 2024 from 16.1% in Q4 2023, thanks to cost savings initiatives.

Significant Inventory Reduction

Inventory decreased by $48.4 million compared to Q3 2024 and has been reduced by $76.3 million from peak levels in March 2024.

Improvement in Safety Metrics

TRIF rate of 0.94% in Q4 2024, a 7% decrease from Q4 2023, indicating progress in workforce safety.

Lowlights

Decreased Gross Profit Margins

Gross profit margin decreased by 420 basis points to 17.1% in Q4 2024, affected by increased market pressures and a lower proportion of higher-margin sales.

Significant Decline in ERS Sales

ERS sales decreased by $25 million or 24% due to lower sales in all regions, particularly in Western Canada.

Decline in Adjusted EBITDA and Net Earnings

Adjusted EBITDA decreased by $12.1 million or 25.6% from Q4 2023, and adjusted net earnings fell by 58.2% or $0.48 per share.

Restructuring Costs

A restructuring cost of $5.8 million was recognized in Q4 2024 due to workforce reductions.

Company Guidance

During the Wajax Corporation's 2024 fourth quarter and year-end financial results webcast, several key metrics were discussed. The company reported a 4.3% increase in revenue, reaching $565.9 million, primarily driven by higher mining equipment sales in Western Canada. Despite revenue growth, the gross profit margin decreased by 420 basis points to 17.1% due to market pressures and a shift in sales mix. Selling and administrative expenses dropped to 14.1% of revenue, reflecting an 8.5% decrease from the previous year. Notably, adjusted EBITDA fell by 25.6% to $35.1 million, while adjusted net earnings per share sank by 58.2% to $0.35. The TRIF rate improved by 7% from the prior year, underscoring a continued commitment to safety. Inventory levels saw a significant reduction from peak levels, and the backlog decreased by 4% sequentially, though it showed a slight year-over-year increase. Cash flows from operating activities were strong at $75.9 million, and the leverage ratio improved to 2.61 times. Despite these financial dynamics, the company maintained a dividend of $0.35 per share for the first quarter of 2025, while focusing on operational efficiency initiatives and strategic priorities to navigate market headwinds.

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.