Calian Group Ltd (CGY-T)

In Q4 – 2024, CGY reported a revenue growth rate of 3%, with revenues reaching $181M compared to last year’s $175.9M. Adjusted EBITDA margin improved in the quarter to 12.5% from 11.6% last year. Overall, these were acceptable numbers but not that strong, revenue growth slowed down in Q4 compared to previous quarters. It managed to grow its topline consistently over the last few years through acquisitions. In the last five years, CGY’s revenue EBITDA also grew by 16% and 23% annualized, respectively. It is trading at 10.2x Forward P/E. 

The company also expects the FY2025 revenue to be in the range of $800M - $880M, indicating a mid-point revenue growth rate of around 12%. Overall, it looks interesting, given its cheap valuation and double-digit growth rate.
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For Q2, EPS beat estimates of $1.17 coming in at $1.34. Revenue also beat estimates of $195.96M coming in at $201.27M increasing 19% year-over-year. Operating margins continued to expand nicely. The company increased its FY2024 guidance following these results. This was a strong quarter for CGY as the company appears to have executed on revenue and margin expansion initiatives. The share buyback is an additional positive sign. Size risks are of course a factor here, but we will start to view CGY more positively if it can continue to maintain momentum from Q2. 
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It is four businesses together with an excellent CEO, good yield and is a low double digit grower. A steady, defensive stock.

In Q4, CGY recorded both EPS and revenue beating analysts’ forecasts. EPS came in at $1.07 versus analysts’ estimates of $0.956. Revenue beat estimates of $170.54M, coming in at $175.95 and displaying a 9.6% year-over-year growth. This was a record quarter for CGY in terms of revenues, adjusted EBITDA, and gross margin. Management stated that CGY will come in at the midpoint of guidance for FY2023 which would display a year-over-year revenue growth of 15% and adjusted EBITDA growth of 32%. EPS growth is expected to be significant next year, above 32% while revenues are also expected to see solid growth at 14.5%. Despite being down year-to-date, we think that CGY has a very stable business and following the strong quarterly results it is already ticking back up. We view it as a HOLD.
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CGY released 2Q numbers; EPS of 40c was nowhere near estimates of $1.04; Revenue of $166.5M matched estimates. Revenue rose 11%. Free cash flow was $11M. New contracts were $131M. Higher costs and investments hurt results, and the company has identified $8M in cost savings but it will take a charge to earnings. It also updated its guidance and sales are now expected to be lower than previously expected. CGY has a strong balance sheet and growth is expected next year. Not a great quarter but with the stock hit already and the low valuation we would see it as a HOLD right now. 
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There is ample balance sheet flexibility to allow for more acquisitions. Further expansion in the US or other areas of service can definitely lead to potential M&A activities as it has before. There is decent growth expected over the next few years with margin expansion and integrations to be the primary goal. It is more attractive now at 14x forward earnings (lower end of the five-year range) and with CGY being debt-free and with solid growth, things look good. We don't do price targets, however, we do think that is achievable. 
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The balance sheet is pristine and has excess cash. Growth is expected to be moderate with improving margins. Relatively cheap compared to historic levels. Valuation is okay at 17x earnings. You would but for income not growth. Unlock Premium - Try 5i Free

(Past Top Pick Sept. 29, 2017, Up 9%) Health IT training services and managing health delivery for Canadian Armed Forces families (out of Saskatoon); also do pharmacies in Loblaws. Companies are happy to outsource these services to CGY. Offers one of the higher returns in invested capital among medium-sized stocks.

Difficult company to describe. They are in different segments. They have a Health Care Clinical Management segment, they do emergency response training and they are also in manufacturing for satellite and some other work. They brought a new CEO a few years back and he has put some good initiatives to drive growth.

See Past Picks today. This one is fairly diversified. It was a top pick previously and he still owns it and is still enthusiastic about it.

(A Past Top Pick Jul 14/16, Up 69%) A variety of aerospace businesses. There has been a big secular move as more and more countries have begun to travel. There is a lot of technology consulting coming down the pipe. We will need these tech consulting firms.

It does 145 pharmacies by Loblaw’s (L-T) and medical services for the Canadian Defence Department, as well as a satellite business out of Saskatoon. One of the most consistently profitable small-cap companies for the last 5 years. 4% dividend yield. (Analysts’ price target is $31.00.)