Backed by positive investor sentiment, expansion through strategic acquisitions and healthy financial performance, Savaria (TSX: SIS) has outperformed the broader market. The stock has returned 12.6% over the last twelve months and an impressive gain of 47.1%. With that in mind, let’s take a closer look at Savaria’s recent financial performance, growth prospects, and valuation to assess whether the stock represents an attractive buying opportunity.
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Savaria’s performance in the third quarter
Savaria manufactures, distributes and installs accessibility equipment for residential and commercial applications, as well as a wide range of medical products designed to support the safe movement of patients. The company serves global markets through its network of manufacturing facilities, direct sales offices and an extensive international dealer network.
In its most recent third-quarter results, the Laval-based company generated revenue of $224.8 million, up 5.2% year over year. A combination of organic expansion, favorable currency movements and the acquisition of Western Elevator drove sales growth. Organic growth contributed 1.8%, favorable currency effects 2.5%, and the acquisition was responsible for 0.9% of the total turnover increase.
In addition, operating income grew 25.7% to $27.7 million, driven by revenue growth and gross margin expansion, partially offset by higher selling and administrative expenses. Meanwhile, the operating margin grew from 10.3% to 12.3%. Furthermore, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted earnings per share (earnings per share) increased by 13.9% and 52.4%, respectively. In addition, the adjusted EBITDA margin increased by 170 basis points to 21.2%.
Savaria’s growth prospects
Savaria will benefit from the steadily aging global population, which continues to expand the addressable market for mobility and accessibility solutions. At the same time, the company remains focused on product innovation, regularly introducing new solutions to meet changing customer needs and strengthen its competitive position.
Savaria also recently completed the acquisition of Baxter Residential Elevators, a dealer and installer of home elevators and elevators that generated $5.5 million in revenue by 2025. This transaction strengthens Savaria’s presence in North Texas – one of the fastest growing regions in the United States – and supports its broader North American expansion strategy.
In addition, the completion of the ‘Savaria One’ initiative late last year improved operational efficiencies, allowing the adjusted EBITDA margin to exceed 20%. The initiative streamlined factory layouts, improved inventory management, improved purchasing collaboration between locations and addressed workforce skills gaps. Furthermore, the company has stated that it will unveil the second phase of its ‘Savaria One’ strategy in April, in which it will outline its strategic roadmap for the next five years.
Given favorable demographic tailwinds, strategic acquisitions, operational improvements and growing margins, Savaria appears well positioned to maintain its financial momentum in the coming years.
Investor takeaway
Supported by strong buying interest in recent months, Savaria’s valuation has increased. The stock is currently trading at a trailing twelve month price-to-earnings (NTM) ratio of 1.9 and a price-to-earnings ratio of 19.1, which still seems reasonable given its growth profile and margin expansion.
In addition to the potential for capital growth, Savaria offers a monthly dividend of $0.0467 per share, yielding approximately 2.2% over time. Given the solid business fundamentals, improving profitability, favorable growth prospects and balanced valuation, I remain optimistic about Savaria’s long-term prospects.
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