Small-cap earnings mixed as Cogeco beats forecasts but warns of weaker outlook, while West Fraser cuts U.S. mills
Canadian small-cap companies reported a range of results, with Cogeco Communications posting a dividend-raising beat but issuing a soft 2027 outlook, and West Fraser Timber announcing indefinite closures of two U.S. facilities.
Canada’s S&P/TSX Small Cap Index has risen about 26% over the past year, prompting attention to several recent earnings releases.
Cogeco Communications posted fourth-quarter revenue of $695.5 million, slightly below the prior-year level but ahead of analysts’ $690.5 million estimate. Adjusted earnings were $2.05 per share, beating the $2.28 consensus. CEO Frédéric Perron highlighted a rebound in Canadian internet subscriber growth and gains in wireless and oxio sales, while noting continued challenges in the U.S. market. The company raised its quarterly dividend 2% to $1.007 per share. However, its outlook for 2027 projects a low- to mid-single-digit revenue decline on a constant-currency basis and a mid- to high-single-digit drop in adjusted EBITDA, prompting National Bank Financial analyst Adam Shine to describe the guidance as “rather weak.”
Algoma Steel reported third-quarter revenue of $249.4 million, down from $523.9 million a year earlier, and a net loss of $129.6 million, an improvement from the prior-year loss but still exceeding expectations. The company attributed the change to the transition from legacy blast-furnace operations to its new electric-arc furnace platform.
West Fraser Timber recorded third-quarter sales of $1.36 billion, missing the $1.42 billion forecast, and posted a loss of $80 million, narrower than the previous year’s $204 million loss. The firm announced indefinite curtailments of its Huguley OSB mill in Alabama and its lumber mill in Arkansas, expecting an asset impairment of $200-$220 million in the fourth quarter. CEO Sean McLaren cited soft demand for wood products due to housing affordability and higher energy costs.
Acadian Timber saw third-quarter sales rise to $24 million and net income increase to $4.4 million, driven by higher timber prices that offset lower volumes. The company noted mixed regional performance, with volume gains in Maine and declines in New Brunswick.
Canada Packers posted third-quarter sales of $420.7 million, a year-over-year decline, and a net loss of $28.1 million. CEO Dennis Organ attributed the results to a “sharp and unusual deterioration in market conditions” that compressed margins, but expressed confidence that the situation is temporary.
Other small-cap updates included Trican Well Service beating earnings expectations, Precision Drilling delivering mixed results with analyst upgrades, and Tamarack Valley Energy reporting higher revenue and profit following a merger announcement. High Liner Foods saw its shares surge after a cash offer from Japan’s Umios Corp., and Ovintiv disclosed a $1.26 billion acquisition of Logan Energy.
Analysts across the sector provided varied commentary, ranging from neutral to bullish, as the small-cap market continues to navigate sector-specific challenges and growth opportunities.