Thanks to a brutal 2016, Canam Group Inc. (TSX:CAM) shares are currently trading at a four-year low. Investors who look past this temporary weakness see many reasons to be bullish.
First, the bad news. Much of the pressure of late has come from the company’s dismal 2016 results. Canam posted a $0.29-per-share loss in 2016, mostly due to a complex unnamed stadium project that didn’t go as planned. Costs were much higher than anticipated, leading to the loss.
But there’s still a lot to like about the construction company.
Management has pledged to stick to simple jobs from now on. This will help ensure steady profitability. Canam has a history of posting solid earnings behind it. In fact, 2015 saw the company make $1.08 per share. The stock currently trades at $6.32.
The stock isn’t just cheap on a potential earnings basis. It’s also inexpensive on a price-to-book value perspective. Canam has a current book value of $12.46 per share, putting the stock today at approximately 50% of book value.
The last time Canam traded at such a discount to its book value was in 2012. Just two years later, shares had tripled. Remember, Canam’s problems in 2012 were very similar to today’s.
Canam also has a backlog of more than $1 billion worth of work, with most projects slated to be completed in the United States.
In the meantime, the company is doing its best to reward shareholders. It has repurchased 2.2 million shares since the beginning of 2016, and shares currently pay a 2.5% dividend.
