Elevate Service Group: Buy, Sell or Hold?

Beacon Securities analyst Donangelo Volpe says Elevate Service Group (Elevate Service Group Stock Quote, Chart, News, Analysts, Financials TSXV:SERV) has improved its financial flexibility, which should support a return to acquisition activity later this year.

In a July 16 update, Volpe maintained his “Buy” rating and $4.00 target on Elevate.

Elevate closed a $10-million bought-deal private placement at $1.90 per share, issuing about 5.3 million shares. The financing was upsized from $7-million, with proceeds earmarked for the balance sheet, acquisitions, organic growth and working capital.

The company also signed a term sheet for a proposed $25-million acquisition credit facility with a Schedule 1 bank, expected to close in Q3 2026. Volpe said the facility would give Elevate more flexibility to support its acquisition strategy, while maintaining a conservative approach to leverage.

Since going public in November, Elevate has completed four acquisitions at 1.5 times to 3.7 times EBITDA, essentially tripling revenue to about $90-million and EBITDA to $10-million on a pro forma trailing-12-month basis.

Volpe said the company has recently focused on integration and cost reductions through technology and centralized operations, including insurance, purchasing, inventory management and parts.

The analyst expects M&A activity could resume in late Q3 or early Q4, supported by the equity financing and proposed credit facility. Volpe sees potential for three to four bolt-on acquisitions per year, likely at three to five times EBITDA.

“We believe that potential acquisitions over the near term will likely focus on increasing the internalized technician base to help drive margin improvements or entry into new services lines to provide a more extensive offering to existing clients,” Volpe said.

He said expanding the internalized technician base outside Ontario, likely in Western Canada, should be a near-term focus. Volpe models margins from internalized technicians at more than 60%, compared with subcontractor margins of about 15% to 20%.

Potential new service lines include HVAC, security systems and fire protection, with longer-term opportunities in specialty cleaning, commercial signage, store construction and pest control.

Volpe noted that Elevate trades at 7.2 times his fiscal 2027 Adjusted EBITDA estimate, a 50% discount to peers at 14.4 times.

He expects Elevate to generate Adjusted EBITDA of $8-million on revenue of $77-million in fiscal 2026, improving to Adjusted EBITDA of $15-million on revenue of $109-million in fiscal 2027.

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