While the broader markets are trading near all-time highs, several TSX stocks remain at compelling valuations in July 2025. Valued at a market cap of $1.6 billion, Bird Construction (TSX: BDT) is one such industrial stock that is down 12% from all-time highs.
Bird Construction is a Canadian general contractor, specializing in industrial, commercial, and institutional construction projects. It builds manufacturing facilities, hospitals, schools, office buildings, and infrastructure, such as roads and bridges.
Bird offers comprehensive services, including structural work, electrical systems, civil construction, and specialized services such as asbestos abatement, serving a range of sectors from oil and gas to residential development.
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A strong performance in Q1
Bird Construction delivered robust results in the first quarter (Q1), highlighted by record-breaking backlog growth and margin expansion. The Canadian contractor reported revenue of $717.6 million, representing a 4.3% year-over-year increase, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) surged 41% to $34.1 million.
The standout achievement was Bird’s backlog performance, which reached a historic high of $4.3 billion after adding $1.3 billion in new contracts and awards during the quarter, exceeding work executed by 85%.
Combined with the pending backlog, the company now has visibility into approximately $8.3 billion of future work, providing substantial revenue visibility through 2026.
Margin expansion continued across all business units, with gross profit percentage increasing to 9.4% from 8% year over year, while adjusted EBITDA margin improved 130 basis points to 4.8%.
CEO Teri McKibbon attributed the improvements to disciplined project selection, enhanced self-perform capabilities, and collaborative contract structures with embedded higher margins.
Bird Construction remains well-positioned for Canada’s infrastructure boom, benefiting from federal commitments to position the country as a global energy superpower. Bird secured new contracts across defence, transportation, and industrial sectors, including work on Ontario Power Generation’s nuclear program and Dow’s Path2Zero initiative.
Despite some deferrals in industrial maintenance spending worth approximately $20 million to $25 million per quarter due to economic uncertainty, management reaffirmed its strategic targets. With trailing 12-month EBITDA margins at 6.5%, Bird remains on track to achieve its 2027 target of 8% adjusted EBITDA margin.
Bird’s financial foundation remains solid with $137.8 million in cash and $336.7 million available under its credit facility, supporting continued organic growth, acquisitions, and shareholder returns.
Is this TSX industrial stock undervalued?
Analysts tracking the TSX stock forecast adjusted earnings to grow from $2.04 per share in 2024 to $3.90 per share in 2027. In this period, free cash flow is forecast to increase from $84 million to $170 million.
A widening free cash flow base should translate to consistent dividend hikes for shareholders. Bird Construction is expected to grow its annual dividend per share to $0.85 in 2025, up from $0.59 in 2024.
Given its outstanding share count, BDT’s annual dividend expense is expected to total $47 million this year, indicating a payout ratio of approximately 35%. Bay Street also expects the TSX stock to raise its dividend to $1.12 per share in 2027.
The dividend stock currently trades at a forward price-to-earnings multiple of 10.7 times, which is below the 10-year average of 13 times. If it trades at 12 times earnings, BDT stock will be priced at $47 per share in early 2027, indicating an upside potential of 62%.
If we adjust for dividend reinvestments, cumulative returns could be over 65% over the next 18 months.
