Small caps to watch: Currency Exchange and D2L shares jump while Enghouse, North West and Stingray fall on earnings
A look at some small-cap stocks making news – or about to.
Canada’s S&P/TSX Small Cap Index (TXTW-I) is up by about 56 per cent over the past 52 weeks. It hit a record 1,496.55 on June. 2. The Russell 2000 in the U.S. is up about 33 per cent over the past 52 weeks. It hit a record of 2,943.97 on June 4.
Small-cap summary:
Currency Exchange International Corp. (CXI-T) shares surged on Wednesday after the company reported second-quarter results that beat expectations.
The company, which provides foreign exchange technology and processing services, reported revenue of US$18-million in the second quarter, which was 13 per cent higher than in the same period last year. The result was ahead of expectations of US$15.6-million, according to S&P Capital IQ estimates.
Its net loss of US$4.2-million or 70 cents US per share compared to a profit of US $1.9-million or 31 cents US a year earlier. “The reported net loss reflected a US$2.4-million net income from continuing operations and a net loss of $6.6-million from discontinued operations, which was officially discontinued during the current quarter,” the company stated.
Excluding non-recurring charges, adjusted net income came in at US$2.4-million or 40 cents US per share compared to US$2.4-million or 37 cents US last year. The expectation was for adjusted EPS of 28 cents US.
Acumen Capital analyst Jim Byrne said the revenue result was above his estimate of US$15.6-million led by growth in the payments business.
“Banknote revenue increased to US$13.2M from US$13.1M in last year’s quarter as wholesale banknotes revenue benefited from new financial institutional clients but was offset by reduced travel activity from existing customers and clients trading on the OnlineFX platform,” he wrote in a note.
He also said that ongoing macroeconomic and geopolitical tensions weighed on travel activity, including inflationary pressures from the Middle East conflict.
Net income was above his estimate of US$1.7-million.
“During the period, the Group advanced the progression of its Direct-to-Consumer Banknotes through physical locations and the OnlineFX ecosystem, adding the State of North Dakota and bringing the total to 48 states,” he wrote. “We view the Q2/FY26 results as positive for the shares given the strong growth in the payments business that outpaced our estimates. While the travel outlook remains cloudy given ongoing geopolitical issues, the company continues to diversify its revenue base with its payment business.”
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The North West Company Inc. (NWC-T) shares fell on Wednesday after the company reported first-quarter results that missed expectations.
After markets closed on Tuesday, the grocery retailer behind brands such NorthMart, Giant Tiger and RiteWay Food Markets reported sales of $631.6-million for the quarter ended April 30, down from $641.4-million a year earlier. The result was below expectations of $645.7-million, according to S&P Capital IQ.
Adjusted EBITDA of $75.8-milion compared to $78-million last year. The result was below expectations of $79.8-million.
Adjusted net earnings decreased 10 per cent to $30.3-million from $33.6-million last year. Adjusted EPS of 62 cents was below the consensus of 67 cents, according to S&P Capital IQ.
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Stingray Group Inc. (RAY-A-T) fell on Wednesday after the company reported fourth-quarter results that missed expectations.
After markets closed on Tuesday, the Montreal-based music, media, and technology company reported revenue of $137.8-million up from $96-million a year ago. The result was below expectations of $140.6-million, according to S&P Capital IQ.
Adjusted EBITDA improved to $42.5-million from $35-million a year earlier. The result was below the consensus of $45.1-million.
Adjusted net income amounted to $20.8-million or 31 cents per share compared to $18.6-million or 27 cents last year. The result was below expectations of 33 cents for the latest quarter.
Canaccord analyst Aravinda Galappatthige said the results were lower than expected despite management reporting strong organic recurring revenue growth in the broadcast and commercial music segment.
“The weakness was primarily in margins, which fell from 36.5% last year to 30.8%, as well as a softer-than-expected result in Radio advertising (down 7.5% y/y),” he wrote in a note. “Importantly, the company also disclosed that Q1/27 is tracking well with organic growth over 20%, and it still expects 35% consolidated margins in F2027 (we have 34.5%).”
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D2L Inc. (DTOL-T) shares jumped on Wednesday after the company reported higher first-quarter revenue that beat expectations and confirmed a share buyback program of up to $20-million.
After markets closed on Tuesday, the company reported revenue of US$57.1-million, up 8 per cent from US$52.8-million in the same period last year. The result was above expectations of US$56.2-million.
Adjusted EBITDA of US$8.3-million compared with US$9.3-million a year ago.
Net income of $1.7-million or 3 cents per share was down from $3.3-million or 6 cents a year ago. The expectation was for EPS of 7 cents, according to S&P Capital IQ.
“The period-over-period decreases are largely explained by the database technology migration,” the company stated.
In a note, TD analyst John Shao described the quarter as a “decent beat, with a sequentially more upbeat tone from management in the press release.”
He also said the share buyback should “boost near-term sentiment and could help stabilize the stock price, particularly if execution continues.”
Stifel analyst Suthan Sukumar described it as a “modest beat” in a note.
“D2L posted modest upside to revenue/EBITDA expectations, though strength didn’t flow through to the FY [full year] guide,” he wrote in a June 10 note. “Recent K-12 churn remains a headwind to ARR [annual recurring revenue] growth – the more important driver for the stock, in our view – but healthy bookings with continued customer win activity point to more robust underlying business momentum. That said, while relatively small and tightening an already tight float, the $20mm SIB [substantial issuer bid] announced alongside the quarter should be a positive catalyst for shares, further underscoring management’s conviction in the outlook.“
Added Mr. Sukumar: “We believe ARR re-acceleration over near-term remains challenging as D2L laps K-12 headwinds and navigates a still muted US higher-ed buying environment… .”
He has a “hold” rating and a $9.50 target on the stock.
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Enghouse Systems Ltd. (ENGH-T) shares dropped on Wednesday after the company reported second-quarter earnings that missed expectations.
After markets closed on Tuesday, the Markham, Ont.-based software company reported revenue of $114.3-million for the quarter ended April 30, down from $124.8-million a year earlier. The result was below expectations of $112.9-million, according to S&P Capital IQ.
Net income increased to $16.3-million or 30 cents per share compared to $13.5-million or 24 cents last year. The expectation was for 34 cents in the most recent quarter.
Adjusted EBITDA was $26.5-million, below expectations of $31.1-million and compared to $28.6-million a year earlier.
“The second quarter reflected ongoing turbulence in global markets, where shifting geopolitical conditions, trade dynamics, and rapid technological change continued to drive uncertainty and dramatic responses,” the company stated. “Through this environment, the company remained patient and disciplined, scaling its operations to current market conditions, maintaining profitability and strong cash reserves, while investing in innovation and long-term growth initiatives.”
TD analyst David Kwan said in a note that he expected the shares to drop after a rebound in software stocks in the last two months given the “significant Q2 miss and the weakening (organic) growth profile.”
However, the analyst added that he believes the company’s “strong balance sheet could help provide some support via buybacks and M&A.”
He has a “hold” on the stock and a $17 target.
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Blackline Safety Corp. (BLN-T) reported higher revenue for its second quarter ended April 30.
Before markets opened on Wednesday, the Calgary-based maker of worker safety monitoring products and services reported revenue of $44.3-million, up from $35.9-million a year earlier and ahead of expectations of $41.3-million.
Its net loss of $3.1-million or 4 cents per share compared with a loss of $3.1-million or 4 cents last year. The expectation was for a loss of 3 cents.
Adjusted EBITDA came in at $2.5-million, up from $1-million a year ago and above expectations of $1.9-million.
Related: Blackline Safety’s $850-million privatization deal faces shareholder opposition
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Canfor Corp. (CFP-T) announced on Tuesday an agreement to purchase PinkWood Ltd.’s I-joist business for $68-million, including working capital.
Calgary-based PinkWood is the largest I-joist facility in Western Canada, producing engineered wood joists for residential, multi-family, and commercial construction.
“PinkWood is a leading manufacturer of high-quality I-joists with a strong management team and stable returns,” said Canfor CEO Susan Yurkovich. “Canfor’s acquisition of PinkWood complements our operations in Western Canada by enhancing product diversification and supporting the continued expansion of our value-added manufacturing capabilities.”
TD analyst Sean Steuart described the deal as a “small, strategically sound bolt-on that adds Western Canadian engineered wood exposure at a reasonable headline multiple.”
Added Mr. Steuart: “The deal is not thesis-changing but improves CFP’s cash flow profile, provides vertical integration with existing sawmills in Western Canada, and offers upside as utilization rates at the facility improve.”
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Cineplex Inc. (CGX-T) announced box office revenues of $60.5-million for May 2026, its highest May box office since 2019.
“Cineplex’s May performance was driven by a compelling and diverse film slate, resulting in strong audience engagement, with notable strength among younger moviegoers,” the company stated.
Some of the top-performing films included The Devil Wears Prada 2, Michael, Obsession and Backrooms.
Cineplex said May also represented its highest monthly concession spend per patron on record.
“Momentum has continued into June, with month-to-date box office up significantly compared to the prior year, supported by a strong start to the summer slate, including a franchise-record opening for Scary Movie,” it stated.
National Bank analyst Adam Shine said the second-quarter box office is pacing above his conservative forecast and 2 per cent above current consensus, “assuming at least a flat y/y [year over year] June result.”
He has an “outperform” (buy) and $13 target on the stock.
“Target is based on 2027E NAV, with implied EV/EBITDAaL multiples of 9.4x 2026E & 8.1x 2027E (ex online booking fee penalty of $0.62/share as appeal process continues),” he wrote in a June 9 note.
TD analyst Derek Lessard said in a note that he sees the company potentially beating second-quarter consensus estimates based on box office results.
“YTD, CGX shares are up only 8% (vs. Cinemark +35%),” he wrote. “With a strong film slate through the rest of year and improving FCF and balance sheet, we expect CGX to continue building momentum in 2026.”
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Software company Kneat.com Inc. (KSI-T) announced this week a deal to be taken private by investment firm Thoma Bravo in an all-cash transaction valued at $650 million.
The proposed agreement is for Kneat.com shareholders to receive $6.50 cash per share, which is a 40 per cent premium to its closing price on May 8, the last trading day prior to Kneat announcing an ongoing strategic review. The offer price is also a 20-per-cent premium to its closing price on June 5, the last trading day prior to the announcement of the transaction.
The deal requires the approval of two-thirds of shareholders.
Read the full Globe story here
Stifel analyst Justin Keywood described the deal, “as a positive for KSI investors, provided the premium valuation and perceived AI risk threats that [were] depressing valuation, prior.”
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Upcoming small-cap earnings:
June 10: Haivision Systems Inc. (HAI-T), Major Drilling Group International Inc. (MDI-T),
June 11: Aurora Cannabis Inc. (ACB-T), Transat A.T. Inc. (TRZ-T)
June 12: Roots Corp. (ROOT-T)
June 15: High Tide Inc. HITI-X
June 16: Reitmans (Canada) Ltd. (RET-X), Andrew Peller Ltd. (ADW-A-T)
