Atlas Engineered Products is still undervalued, this analyst says

Beacon Securities analyst Russell Stanley is maintaining his “Buy” with a 12-month target of $2.75 for Atlas Engineered Products Ltd. (Atlas Engineered Products Ltd Stock Quote, Chart, News, Analysts, Financials TSXV:AEP).

The Canada Mortgage and Housing Corporation (CMHC) said March housing starts were 214,000 units on a seasonally adjusted annualized basis, which is 17% below the forecast of 258,000, marking the biggest shortfall since November 2023. February and January figures were also revised down, with February lowered from 229,000 to 221,000 and January from 239,000 to 232,000.

Stanley says actual housing starts, which are more useful for forecasting, totaled 14,900 in March, up 3% from February but down 12% from last year.

In the first quarter, starts totaled 45,300, down 8% year-over-year and 23% from the previous quarter.

Since early March, AEP has repurchased 45,000 shares under its normal course issuer bid, including 15,000 at $0.90 each. So far this year, it has repurchased 125,000 shares at an average cost of $0.98.

AEP is expected to report its fourth-quarter results late next week.

Stanley said while the company hasn’t released details yet, Beacon is forecasting revenue of $15.0-million and adjusted EBITDA of $1.9-million, slightly below the consensus estimate of $15.1-million and $2.2-million. This puts the forecast at the low end of the expected range, which tops out at $2.5-million.