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1. Company Snapshot

1.a. Company Description

AutoCanada Inc., through its subsidiaries, operates franchised automobile dealerships.The company offers a range of automotive products and services, including new and used vehicles, vehicle leasing, vehicle parts, vehicle maintenance and collision repair services, extended service contracts, and vehicle protection and other after-market products.It also arranges financing and insurance for vehicle purchases by its customers through third-party finance and insurance sources.


The company sells its vehicles under the Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Porsche, and Honda brands.As of March 2, 2022, it operated 78 franchised dealerships in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, and New Brunswick in Canada, as well as in Illinois, the United States.The company also offers used vehicles online.


AutoCanada Inc.was incorporated in 2009 and is headquartered in Edmonton, Canada.

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1.b. Last Insights on ACQ

AutoCanada's recent performance was negatively impacted by leadership uncertainty and transition. The appointment of CFO Sam Cochrane as Interim CEO, following Paul Antony's departure from his Executive Chair role, may have raised concerns about the company's strategic direction. Additionally, the sale of North City Honda, a US dealership, and a mixed analyst rating landscape, with a recent upgrade to Outperform at BMO and CIBC, may have contributed to short-term pressure.

1.c. Company Highlights

2. AutoCanada's Transition: A Leaner Structure for Growth

AutoCanada reported revenue from continuing operations of $1.2 billion, down from $1.4 billion in the prior year, reflecting softer performance across new and used vehicle sales, parts and service, and F&I. Adjusted EBITDA from continuing operations was $58.1 million, with margins expanding year-over-year to 4.8%. The company's EPS came in at -$0.14, missing estimates of $0.52. The current P/E Ratio of -24.47 and P/S Ratio of 0.09 indicate that the market is pricing in significant challenges, but the EV/EBITDA of 10.08 suggests a relatively reasonable valuation.

Publication Date: Nov -16

📋 Highlights
  • Revenue Decline:: Revenue dropped to $1.2 billion in Q3 2025 from $1.4 billion in the prior year due to weaker new/used vehicle sales and parts/service demand.
  • Adjusted EBITDA Resilience:: Adjusted EBITDA from continuing operations was $58.1 million (4.8% margin), up from $63.1 million in 2024, despite headwinds.
  • Cost Transformation Progress:: Achieved $100 million of $115 million 2025 annual run rate savings target, driving ~20% YoY normalized operating expense reductions.
  • Collision Growth:: Collision revenue surged 19% YoY, contributing $20 million+ EBITDA in 2025 after turning from a 2019 loss.

Operational Highlights

The company's collision revenue grew 19% year-over-year, driven by higher demand, new OEM certifications, and increased insurance referral activity. The benefits of the company's cost transformation efforts are visible in the expanded EBITDA margin and normalized operating expenses, which are down more than 20% year-over-year. As the company noted, "We've achieved roughly $100 million of our $115 million 2025 annual run rate savings target, driven by head count optimization, tighter expense and inventory management, consumer efficiencies, and process improvements."

Outlook and Strategy

The company's short-term priorities include delivering the remaining cost reductions, completing the U.S. divestitures, and pivoting the business towards operational excellence with a focus on the customer. For 2026, analysts estimate revenue growth of 2.0%. The company is cautiously optimistic about the consumer backdrop, with the Canadian consumer remaining relatively strong. AutoCanada plans to focus on expanding gross profit across a leaner cost base and is already planning for its 2026 dealership operational strategy.

Valuation and Growth Prospects

With a ROE of -3.78% and a Net Debt / EBITDA of 8.05, the company's leverage remains a concern. However, the company's ROIC of 8.6% indicates a relatively healthy return on invested capital. As the company continues to execute its turnaround strategy, the market will be watching for signs of growth and improved profitability. The company's plans to dedicate more capital to its collision business and drive growth across new sales, used sales, and service operations are expected to drive future growth.

3. NewsRoom

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AutoCanada Inc (AOCIF) Q3 2025 Earnings Call Highlights: Navigating Challenges with Strategic Growth

Nov -14

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AUTOCANADA ANNOUNCES EXECUTIVE PROMOTIONS AND LEADERSHIP TRANSITIONS

Nov -13

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AutoCanada Names CFO Sam Cochrane Interim CEO as Paul Antony Steps Down from Executive Chair Role

Oct -29

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AUTOCANADA APPOINTS SAM COCHRANE AS INTERIM CHIEF EXECUTIVE OFFICER, PAUL ANTONY TRANSITIONS FROM HIS ROLE AS EXECUTIVE CHAIR AND DIRECTOR TO PURSUE OTHER OPPORTUNITIES IN AUTOMOTIVE TECHNOLOGY AND DATA

Oct -28

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AUTOCANADA ANNOUNCES CONFERENCE CALL AND WEBCAST DETAILS FOR Q3 2025 FINANCIAL RESULTS

Oct -08

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AUTOCANADA EXPANDS COLLISION NETWORK WITH EDMONTON ACQUISITION

Oct -06

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AutoCanada Inc.'s (TSE:ACQ) Intrinsic Value Is Potentially 67% Above Its Share Price

Oct -02

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3 Undervalued Small Caps In Global With Recent Insider Buying

Sep -18

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.01%)

6. Segments

Used Vehicles

Expected Growth: 1.2%

AutoCanada Inc.'s used vehicle segment growth of 1.2% is driven by increasing demand for affordable transportation, expansion of online marketplaces, and strategic dealership acquisitions. Additionally, the company's focus on certified pre-owned vehicles, competitive pricing, and improved customer experience contribute to the growth.

New Vehicles

Expected Growth: 0.8%

AutoCanada Inc.'s new vehicle segment growth of 0.8 is driven by increasing demand for fuel-efficient vehicles, strategic partnerships with OEMs, and expansion into high-growth markets. Additionally, investments in digital retailing and customer experience enhancements have improved sales conversion rates, contributing to the segment's growth.

Parts, Service and Collision Repair

Expected Growth: 1.1%

Parts growth driven by increasing vehicle complexity and higher-margin sales. Service growth fueled by rising vehicle usage and maintenance requirements. Collision Repair growth attributed to higher claims frequency and severity, as well as increased insurance coverage.

Finance, Insurance and Other

Expected Growth: 0.9%

AutoCanada Inc.'s 0.9 growth in Finance, Insurance, and Other is driven by increased vehicle sales, higher finance and insurance product penetration, and expansion of its dealership network. Additionally, the company's focus on digital retailing and online financing platforms has improved customer experience, leading to increased revenue. Furthermore, strategic partnerships with lenders and insurance providers have enhanced profitability.

7. Detailed Products

New Vehicle Sales

AutoCanada Inc. sells new vehicles from various manufacturers such as Toyota, Ford, and Chrysler through its dealership network.

Used Vehicle Sales

AutoCanada Inc. offers a wide range of pre-owned vehicles, including certified pre-owned vehicles, through its dealership network.

Parts and Accessories

AutoCanada Inc. sells original equipment manufacturer (OEM) parts and accessories for various vehicle makes and models.

Service and Repair

AutoCanada Inc. offers vehicle maintenance and repair services through its dealership network, including routine maintenance, repairs, and warranty work.

Collision Repair

AutoCanada Inc. offers collision repair services through its dealership network, including body shop repairs and paintless dent repair.

Financing and Insurance

AutoCanada Inc. offers financing and insurance products to customers, including financing options for vehicle purchases and insurance products for vehicles.

8. AutoCanada Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AutoCanada Inc. faces moderate threat from substitutes, as customers have limited alternatives for purchasing and servicing vehicles.

Bargaining Power Of Customers

AutoCanada Inc. has a large customer base, but individual customers have limited bargaining power due to the company's diversified revenue streams.

Bargaining Power Of Suppliers

AutoCanada Inc. relies on a few large suppliers, giving them some bargaining power, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

Entering the automotive retail market requires significant capital investment, regulatory compliance, and established relationships with manufacturers, making it difficult for new entrants to compete with AutoCanada Inc.

Intensity Of Rivalry

The automotive retail market is highly competitive, with many established players, making it challenging for AutoCanada Inc. to maintain market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 76.75%
Debt Cost 10.33%
Equity Weight 23.25%
Equity Cost 17.21%
WACC 11.93%
Leverage 330.17%

11. Quality Control: AutoCanada Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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AutoCanada

A-Score: 4.1/10

Value: 6.2

Growth: 3.0

Quality: 2.1

Yield: 0.0

Momentum: 9.5

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

-1.74$

Current Price

21.75$

Potential

-108.01%

Expected Cash-Flows