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  5. DRX: Hi 5i, I've read through your previous comments on the company and I was wondering [ADF Group Inc. Subordinate Voting Shares]
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Investment Q&A

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Q: Hi 5i,

I've read through your previous comments on the company and I was wondering:

1) What do you perceive as the key drivers to this company's performance?
2) What do you think explains the rollercoaster that the share price has gone through?
3) What should I pay attention to if I want to decide whether the company will right the ship and re-establish its momentum?

Thanks!
Asked by Blake on March 04, 2025
5i Research Answer:

New contracts are the key to revenue/earnings growth. This stems from proper bidding and successful completion on 'marquee' contracts. The roller coaster began with very very strong numbers, and then markets reacted to insider trading, and made the assumption growth was over. The company bought back a lot of shares but this did not sway sentiment. Then, growth slowed and some estimates were missed, which impacted valuation. Layer on tariffs and economic uncertainty for some added bumps along the way. For DRX, we would watch the backlog, execution (meeting/beating estimates) and costs. If there is cost creep on contracts then it will be hard for the company to grow as expected. Momentum does play a role with small cap stocks and should not be ignored. We would watch the balance sheet (it's fine now) to ensure survivability if we hit a recession bump.