Valued at a market cap of $1.4 billion, Savaria (TSX:SIS) is a small-cap company that has delivered outsized gains to shareholders since its initial public offering in April 2001. In the last 24 years, the TSX stock has returned 4,850% to shareholders. However, if we adjust for dividend reinvestments, cumulative returns are closer to 10,700%. So, a $500 investment in Savaria stock soon after it went public would be worth over $54,000 today.
Despite its market-thumping gains, Savaria stock offers shareholders an attractive dividend yield of 2.7% with a monthly payout. Let’s see if you should own this TSX dividend stock at the current valuation.
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Is this monthly dividend stock a good buy?
Savaria Corporation specializes in accessibility and patient care solutions for elderly and physically challenged individuals. Through its accessibility segment, the company provides residential and commercial elevators, stairlifts, platform lifts, and adapted vehicles. Its patient care segment offers ceiling lifts, patient transfer equipment, bathing aids, medical beds, and therapeutic surfaces for healthcare facilities and home settings.
In the first quarter (Q1) of 2025, Savaria reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $40.6 million, indicating a margin of 18.5%. Revenue grew 5.2% to $220.2 million, with strong performance in North America, where the Accessibility segment surged 11.8%.
While European revenue declined slightly by 2.8%, management indicated this market is stabilizing after the strategic sales restructuring was implemented in early 2024. The patient care segment delivered modest 2.1% growth with a strong backlog developing for future quarters.
Gross margin expanded 180 basis points year over year to 37.8%, while adjusted EBITDA margin improved 190 basis points to 18.5%. On a trailing 12-month basis, the company is now operating at a 19% EBITDA margin, approaching its Savaria One transformation target of 20%.
Savaria’s vertically integrated manufacturing model has helped shield it from inflationary pressures. The Savaria One initiative has implemented over 350 improvement projects across the business, with 130 new initiatives added in Q1 alone. These initiatives include manufacturing efficiencies, procurement optimization, and commercial growth strategies.
Savaria’s balance sheet remains strong, with the net debt to adjusted EBITDA ratio improving to 1.49 times from 1.63 times at the end of 2024. Free cash flow increased 58% year over year to $10.3 million, providing ample capacity for strategic investments and acquisitions.
Management announced the acquisition of Western Elevator, a dealer in British Columbia with annual sales of approximately $7.5 million, strengthening its direct-to-consumer presence. Additionally, the company is investing $30 million to expand its Greenville facility by 55,000 square feet, increasing North American manufacturing capacity.
New product development continues to advance Savaria’s global one-stop-shop strategy. It launched the Luma home elevator, manufactured in Mexico for worldwide distribution, and introduced the Savaria Multilift to the European market, complementing its Patient Care division’s success with the new M-Series clinical ceiling lift.
Despite economic uncertainty and recent trade tensions, all Savaria products currently comply with USMCA (United States-Mexico-Canada-Agreement) requirements, meaning they’re exempt from duties.
Management maintained its 2025 guidance of approximately $925 million in revenue with adjusted EBITDA margins between 17% and 20%, though executives indicated they’re aiming for the higher end of this range.
Is this TSX stock undervalued?
Analysts tracking the TSX stock expect adjusted earnings to expand from $0.90 per share in 2024 to $1.54 per share in 2027. Today, Savaria stock trades at a forward price-to-earnings multiple of 18.2 times, lower than its 10-year average of 22.5 times. If the TSX dividend stock is priced at 18 times forward earnings, it will trade around $28 per share in May 2027, indicating an upside potential of 40% from current levels.
