Imaflex stock is undervalued, this analyst says

Imaflex (Imaflex Stock Quote, Chart, News, Analysts, Financials TSXV:IFX) posted solid first-quarter results, with stronger margins and improving Canadian sales, prompting Beacon Securities analyst Donangelo Volpe to reaffirm his “Buy” rating and $2.00 target in a May 27 note.

Volpe said Adjusted EBITDA of $4-million, up 28% year over year, beat expectations and showed the company’s ramp-up strategy is paying off despite some slower equipment integration.

Imaflex makes polyethylene films for packaging and agricultural use in the U.S. and Canada. It operates manufacturing facilities in Quebec and North Carolina and is based in Montreal. Founded in 1994, the company began as a traditional plastic packaging manufacturer.

Imaflex reported Q1 2025 revenue of $29-million, up 6% year over year and just below Beacon’s estimate of $30-million.

“Revenue growth was attributable to higher sales volumes and favourable FX movements, though the ramp-up from new extruders was slower than we had anticipated,” Volpe said. “Geographically, Canada accounted for 35% of revenues in the quarter while United States accounted for 65%. Revenue from Canada showed solid improvement, up 21% y/y, while United States revenue declined 1% y/y. Gross margin was 16%, ahead of our 13% estimate and an improvement from 15% last year. SG&A was 8.5% of sales compared to 8.0% last year due to higher salaries, benefits, leadership restructuring, and profit-sharing provisions.”

Net income was $0.3-million, down from $1.8-million a year ago, but adjusted net income rose 17% to $1.6-million. EPS was $0.01, below Beacon’s estimate of $0.02, but beat expectations on an adjusted basis at $0.03.

Volpe said insider activity is encouraging, noting that on May 8, CEO Stephan Yazedjian bought 800,000 shares at an average price of $1.45 from Executive Chairman Joe Abbandonato.

“We view the transaction as bullish given the premium paid to current share price,” Volpe said.

The analyst thinks that Imaflex will do $15.9-million in Adjusted EBITDA on revenue of $119.6-million in fiscal 2025.

The analyts added that Imaflex is maintaining a strong balance sheet, with $20-million in available liquidity, including $8-million in cash, an entirely unused $12-million credit line and no long-term debt.

“We anticipate that the company will continue to prioritize building out its cash position utilizing its free cash flow but believe there remains tuck-in acquisition opportunity in the United States that would help accelerate growth.”

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