Is Atlas Engineered Products (TSXV:AEP) a buy right now?

Beacon Securities says Atlas Engineered Products’ (Atlas Engineered Products Stock Quote, Chart, News, Analysts, Financials TSXV:AEP) Q2 results should show a rebound in revenue and EBITDA after a seasonally softer Q1.

Analyst Russell Stanley said he expects Atlas to report Q2 revenue of $15.9-million and Adjusted EBITDA of $1.8-million, slightly ahead of consensus at $15.6-million and $1.3-million. In an August 18 report, Stanley maintained his “Buy” rating and $1.00 price target on AEP.

His forecast implies sequential revenue growth of 71%, with Adjusted EBITDA swinging from an $800,000 loss in Q1. Year-over-year, Stanley expects revenue and Adjusted EBITDA growth of 16% and 62%, respectively.

Atlas is scheduled to report Q2 results Aug. 25, with a conference call at 11 a.m. ET.

Stanley said Q1 orders nearly doubled year-over-year to $21-million, pointing to improving demand and builder sentiment. He expects updates on Q2 orders, the broader demand environment, M&A potential and development of the company’s robotics facility in Clinton, Ont.

“We will be particularly interested in management’s reviews toward recent government initiatives to support homebuilding construction,” Stanley said in his Aug. 18 preview.

The analyst pointed to recent federal and provincial housing measures, including $1-billion of infrastructure funding tied to municipalities that do not levy development charges on new-home construction, as well as Ontario’s expanded HST relief on new homes.

Stanley said July housing starts came in below consensus, but he views raw starts as more useful for modelling Atlas demand. Q2 raw starts were 57,300, down 14% year-over-year but up 18% sequentially.

Atlas shares have rallied 27% from their early July intraday low and trade at six times Stanley’s fiscal 2027 Adjusted EBITDA forecast, a 43% discount to Builders FirstSource.

Potential catalysts include Q2 results, initial production from the Clinton facility and M&A activity.

Stanley expects Atlas to generate Adjusted EBITDA of $9-million on revenue of $70-million in fiscal 2026, improving to Adjusted EBITDA of $13-million on revenue of $82-million in fiscal 2027.

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