Stock price declines amid the collapse
Meantime, many of its rivals have seen double-digit stock price declines amid the collapse in oil prices that has slowed oil and gas activity in resource-rich provinces such as Alberta.
Most of Toromont’s business is through its network of branches in Ontario, Manitoba, Newfoundland and Labrador, and Nunavut. They provide sales and service of equipment for industries such as construction, forestry, mining and agriculture. About 85 per cent of its revenue comes from the equipment division, while the remainder is from refrigeration services the company offers to the food and beverage industry as well as hockey arenas.
Toromont’s equipment division has been challenged by the prolonged slump in the mining sector, but some believe it could benefit from a pickup in business activity in Central Canada that is expected to be driven by the weak Canadian dollar and strengthening American economy.
“I think it’s an interesting little riff on a stronger U.S. economy and lower dollar,” said Andy Nasr, managing director and senior portfolio manager at Middlefield Capital Corp. “It’s on our radar.”
Mr. Nasr said he would consider buying the stock for his clients if the price softens from its current level above $27.
Among the nine analysts who cover the stock, eight have a “hold” or equivalent rating while one rates it a “buy,” according to S&P Capital IQ. The analyst consensus price target for over the next year is just above $28.