This Canadian smallcap stock is undervalued, analyst says

Beacon Securities analyst Russell Stanley noted that Cematrix Corporation (Cematrix Corporation Stock Quote, Chart, News, Analysts, Financials TSXV:CEMX) delivered its biggest contract announcement of the year, securing $12-million in new awards that include highway, tank base, pipeline abandonment and tunnel projects.

In a Sept. 19 report, Stanley reiterated his “Buy” rating and $0.55 target for the Calgary-based specialty construction contractor, which produces cellular concrete solutions on-site. The latest awards lift Cematrix’s year-to-date total to $44-million, with some work scheduled for completion this year and the balance in 2026.

“This is the largest single award announcement this year,” Stanley said.

Cematrix exited the second quarter with a $76-million backlog, and with work now underway on two large projects, Stanley expects the backlog to trend closer to about one times sales over time, compared to the current 1.5 times. He added that the third quarter is typically the strongest of the year, averaging 36% of annual revenue over the 2020–2024 period.

Work began in July on a delayed $22-million project in North Carolina, which should provide steady revenue contributions for several quarters and demonstrate cellular concrete’s use in large-scale projects. Stanley cautioned that larger projects are usually more competitive and lower margin, and he expects gross margins to moderate in Q3, though he continues to forecast record Adjusted EBITDA in fiscal 2025.

Stanley said Cematrix should generate about $6-million in Adjusted EBITDA on $49-million in revenue in fiscal 2025, improving to $10-million on $67-million in revenue in fiscal 2026.

He added that the technical picture has improved with the stock gapping higher on the contract win, breaking its downtrend. Cematrix trades at 4.8 times his fiscal 2026 EBITDA forecast, a 48%–50% discount to cement producers and infrastructure peers at 9.2–9.6 times. Potential catalysts, he said, include further contract wins, Q3 results in November, and possible M&A activity.

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