When it comes to finding a well-kept secret in the stock market community, it’s already difficult. But then you have to add in something else: this investment needs to last. Not just a few months; not even a year or two. It needs to be an investment you can pick up and hold for years and even decades to come.
That’s why today we’re looking at GDI Integrated Facility Services (TSX:GDI). This small-cap cleaning and facility maintenance company is going through a lot of insider buying, especially after earnings that led to a dip in the share price. Now, that share price is coming back up, which makes it possibly the perfect time to pounce.
What happened?
Right now is a prime time to get into GDI after earnings that weren’t exactly stellar. In the second quarter, GDI reported revenue at $610 million. This was a 5% drop from the year before, and resulted in a net loss of $1 million, or $0.04 per share. The decrease came down to a few factors. First, there were organic declines. Then, there were specific challenges, including low-margin account reductions as well as client losses.
Despite the reduced revenue, there were some bright spots. For instance, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) remained stable. This hit $34 million, with an improved margin of 6%. This demonstrated operational efficiency even with the volatility.
Furthermore, the company’s technical services segment improved. This area also saw a 6% EBITDA margin, driven by higher project revenue margins. So, while revenue was a sore spot, it wasn’t a hopeless quarter.
Looking ahead
Now that we have a take on earnings, let’s look to the future. After all, shares might be down 20% in the last year, but those shares are now up 8% after the earnings drop. The company is now looking ahead at ways to manage the balance sheet. It’s already started the process, slightly reducing long-term debt and enhancing its financial stability.
Now, the Canadian stock is focusing on cost management and finding new contracts to firm up in the United States. This would help improve future revenue performance and bring investors back on board. And with no dividend, that leaves plenty of room to support those growth opportunities.
The company already secured several new contracts that start up in the third quarter. This might boost performance for the second half of 2025. So, while shares might be down now, those could turn right around as the Canadian stock strengthens its market position.
Bottom line
GDI is a strong diamond in the rough. Sure, it’s one that you’ll have to dig through some dirt to find, but that doesn’t mean you should ignore it completely. The company offers resilience through its consistent EBITDA and cost-management strategies. Meanwhile, there has been recent growth and contract wins that should create more upside in the second half of 2025.
In short, investors need to consider their own investment strategies before investing in this Canadian stock. GDI has its challenges, but also its opportunities. That makes it a potentially high-reward investment for those looking for a new future favourite.
