TD Securities Believes Wajax Corporation (TSX: WJX) Still Has Room to Grow

By Ryan Adsit

Wajax Corporation (TSX: WJX), the Services sector company, has received a rating update from a Wall Street analyst yesterday. The company received a Buy rating from TD Securities’ analyst Michael Tupholme, with a C$28 price target.

Tupholme wrote:

“We have modestly lowered our earnings estimates, as our reduced margin expectations more than offset our increased revenue forecasts. That said, our $28.00 target price remains unchanged, as our lower 2018 EPS estimate is offset by a modest increase in our target P/E multiple (reflects the passage of time and our increased confidence around the likelihood of acquisitions). TD Investment Conclusion Overall, we remain positive on Wajax. We expect revenues to increase modestly y/y in 2017, despite the fact that 2016 benefited from the delivery of four large mining shovels. Regarding margins, notwithstanding competitive pricing pressures, we continue to expect an improvement in margins over our forecast period (driven by cost savings initiatives implemented in 2016). Further, acquisition opportunities offer upside potential (not included in our forecasts). Finally, we see the stock’s valuation and 4.2% dividend yield as attractive. We reiterate our BUY recommendation. 30 30 25 25 20 20 15 15 10 10 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 WJX-T: Price Company Profile Wajax operates three core distribution businesses engaged in the sales and after-sales parts and service support of mobile equipment, industrial components, and power systems.”

Tupholme has an average return of 13.5% when recommending Wajax Corporation.

According to TipRanks.com, Tupholme is ranked #2520 out of 4561 analysts.

Wajax Corporation has an analyst consensus of Moderate Buy, with a price target consensus of C$27.67.

Wajax Corporation’s market cap is currently C$481M and has a P/E ratio of 44.3.

Wajax Corp. engages in the sale, rental, and distribution of industrial products and services. It operates through the following segments: Mobile Equipment, Power Systems, and Industrial Components. The Equipment segment distributes, rents, and modifies mobile equipment. The Power Systems segment offers distribution, servicing, packaging, and integration of mechanical drive systems for applications. The Industrial Components segment supplies bearings and power transmission products; hydraulics products; and related components. The company was founded by Bernard Joseph Coghlin in 1858 and is headquartered in Mississauga, Canada.

The company’s shares closed last Wednesday at $24.26, close to its 52-week high of $25.76.