Dexterra Group. Buy, Sell or Hold?
Beacon Securities analyst Kirk Wilson raised his price target on Dexterra Group (Dexterra Group Stock Quote, Chart, News, Analysts, Financials TSX:DXT) to $14.50 from $12.75 while maintaining a “Buy” rating following fourth-quarter results.
Dexterra reported Q4 2025 revenue of $271.0-million, about 4% below Wilson’s estimate, while Adjusted EBITDA of $32.6-million was in line with forecasts.
The company posted a 12.0% EBITDA margin, continuing the margin improvement seen in recent quarters. Return on equity for the year was 14.4%, approaching the company’s long-term target of 15%.
Wilson noted the capital-light Support Services segment remained the primary growth driver, accounting for 85% of Q4 revenue at $230.6-million and generating $23.9-million in EBITDA for a 10.4% margin, up from 8.8% a year earlier. The division benefited from higher-margin workforce accommodation activity and contributions from recent acquisitions, including Pleasant Valley Corporation and Right Choice Camps & Catering, which added $1.9-million and $4.2-million in EBITDA, respectively, during the quarter.
The Asset-Based Services segment reported revenue of $40.4-million, down 2.2% year-over-year due to lower project activity in camp installation and access matting rentals. However, EBITDA for the segment reached $15.1-million, representing a 37.4% margin, and management expects margins to remain in the 30% to 40% range.
Wilson said free cash flow of $24.5-million in the quarter will support debt reduction, with long-term debt projected to decline to $152.0-million by the end of 2026 from $200.0-million at the end of 2025.
“Dexterra has delivered a solid end to 2025 and has guided to mid-single digit revenue growth in the Support Services division and low-single digit revenue growth for the ABS division in 2026,” Wilson said.
He added that the company continues to see acquisition opportunities across North America and has rolled out initial 2027 forecasts reflecting steady growth.
Wilson expects Dexterra to generate $137.0-million in Adjusted EBITDA on revenue of $1.13-billion in fiscal 2026, improving to $142.0-million in Adjusted EBITDA on revenue of $1.19-billion in fiscal 2027.
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Nick Waddell
Founder of Cantech Letter
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.