Is Elevate Service Group still a buy?

Beacon Securities analyst Donangelo Volpe says Elevate Service Group’s (Elevate Service Group Stock Quote, Chart, News, Analysts, Financials TSXV:SERV) first quarter was below expectations, but he continues to see the company’s consolidation strategy building toward a larger and more profitable platform.

In a June 2 report, Volpe maintained his “Buy” rating and $4.00 target on Elevate.

“While below our expectations, the quarter represented a transitional period as management continued driving positive adj. EBITDA while executing its consolidation strategy and completing several acquisitions that materially expand the platform’s scale and capabilities,” Volpe said.

Elevate reported Q1 revenue of $7.6-million, below Volpe’s $8.1-million estimate, reflecting a full-quarter contribution from Infinity Group Construction and First Choice Maintenance and two months from Charged Electric Services. Volpe attributed the shortfall to demand pulled forward into Q4 2025 and a reduction in Starbucks’ Canadian store count.

Gross margin was 33%, compared with his 35% estimate, while Adjusted EBITDA was $200,000, or a 2% margin, below his $900,000 forecast. Volpe said integration expenses and platform investments weighed on profitability. If Charged had contributed for the full quarter, revenue would have been $7.9-million and Adjusted EBITDA would have been $500,000.

Volpe said Q1 likely marks the low point for the year in both revenue and margin, with significant improvement expected in Q3 and Q4.

“We have modestly revised our FY26 estimates to reflect a slower near-term profitability ramp than previously anticipated, while maintaining our longer-term outlook,” he said.

Volpe left his revenue estimates unchanged but lowered his fiscal 2026 Adjusted EBITDA forecast to $8.2-million from $9.2-million, reducing his implied margin to 11% from 12%. His fiscal 2027 forecast remains unchanged at $109.2-million in revenue and $14.7-million in Adjusted EBITDA.

The analyst said profitability should improve in the second half of 2026 as integration work progresses, technician internalization increases and the contributions from Think Green, JJ&A and TFI become more visible.

“We continue to believe that SERV represents an attractive entry point into a defensive, growing end market with solid consolidation dynamics,” Volpe said.

Volpe said Elevate trades at about seven times his fiscal 2027 Adjusted EBITDA forecast, compared with peers at about 14 times. As the company scales toward more than $15-million in Adjusted EBITDA, he said it should warrant a re-rating closer to peers.

-30-