Roots Corporation (TSE:ROOT)
TSX:ROOT
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Roots Corporation
(TSX:ROOT)
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Rating:75Outperform
Price Target:
C$5.00
▲(27.88% Upside)
Action:Reiterated
Date:04/10/26
The score is driven primarily by solid financial footing (consistent cash generation and reduced leverage) and strong technical momentum (price above key moving averages with positive MACD). Valuation is reasonable but not a major tailwind given the lack of dividend yield data, while the earnings call supports the outlook with margin and balance-sheet improvements alongside manageable execution and macro risks.
Positive Factors
Consistent cash generation and positive free cash flow
Roots produces positive operating and free cash flow across cycles, including during a loss year. That durable cash generation funds investments, NCIB buybacks, and a conservative liquidity cushion, supporting operational flexibility and resilience through retail volatility.
Negative Factors
Earnings volatility and broadly flat multi-year revenue
Flat top-line trends and a material earnings swing in 2025 highlight demand and margin sensitivity typical of apparel retail. Persistent revenue stagnation or recurring profitability shocks would limit reinvestment, stress margins, and could erode shareholder returns over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Consistent cash generation and positive free cash flow
Roots produces positive operating and free cash flow across cycles, including during a loss year. That durable cash generation funds investments, NCIB buybacks, and a conservative liquidity cushion, supporting operational flexibility and resilience through retail volatility.
Read all positive factors
Roots Corporation (ROOT) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$174.42M
Dividend YieldN/A
Average Volume (3M)8.19K
Price to Earnings (P/E)38.3
Beta (1Y)0.32
Revenue Growth5.61%
EPS GrowthN/A
CountryCA
Employees1,788
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)0.12
Shares Outstanding39,196,163
10 Day Avg. Volume3,431
30 Day Avg. Volume8,192
Financial Highlights & Ratios
PEG Ratio-0.22
Price to Book (P/B)0.74
Price to Sales (P/S)0.42
P/FCF Ratio4.63
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$4.25Price Target Upside8.70% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.33
Revenue Forecast (FY)C$283.30M
Roots Corporation Business Overview & Revenue Model
Company Description
Roots Corporation, together with its subsidiaries, designs, markets, and sells apparel, leather goods, footwear, and accessories under the Roots brand in Canada and internationally. The company operates through two segments, Direct-To-Consumer, an...
How the Company Makes Money
Roots Corporation primarily makes money by selling branded apparel and accessories directly to consumers. Key revenue streams include (1) retail sales through company-operated stores, where revenue is recognized from in-store purchases, and (2) di...
Roots Corporation Earnings Call Summary
Earnings Call Date:Apr 09, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jun 17, 2026
Earnings Call Sentiment Positive
The call emphasized multi-quarter momentum driven by DTC strength, record gross margins (61.3%), improved profitability (full-year net income of $4.7M vs prior-year loss), and a materially stronger balance sheet (net debt down 42% to $4.3M and net leverage <0.2x). Operational execution — including double-digit growth in key categories (Cloud Fleece doubled YoY; Activewear double-digit) — and strategic initiatives (10-year Metro distribution partnership, AI-driven inventory tools, targeted marketing and brand collaborations) support a positive growth and margin outlook. Offsetting items include timing-driven declines in Partners & Other (Taiwan wholesale), higher SG&A/marketing and new duties, a full-year free cash flow decline, some inventory buildup alongside isolated Q4 stockouts, and near-term macro/freight uncertainty. Overall, the positive operational and financial improvements materially outweigh the manageable headwinds and one-time/transition costs reported on the call.Positive Updates
Q4 Revenue Growth
Total Q4 sales of $115.5 million, up 4.2% year-over-year (from $110.8M); DTC segment Q4 sales $107.0 million, up 5.7% YoY. Comparable DTC same-store sales +7.3% in Q4 and +14.8% on a 2-year stack.
Negative Updates
Partners & Other Sales Decline (Timing with Taiwan Partner)
Partners & Other sales declined 11.5% in Q4 to $8.5M and down 3.7% for the full year to $38.2M, primarily due to earlier holiday and spring order fulfillment to the Taiwan operating partner (timing impact). Management notes that, excluding those sales, the segment would have grown ~23% YoY.
Read all updates
Q4-2025 Updates
Positive
Negative
Q4 Revenue Growth
Total Q4 sales of $115.5 million, up 4.2% year-over-year (from $110.8M); DTC segment Q4 sales $107.0 million, up 5.7% YoY. Comparable DTC same-store sales +7.3% in Q4 and +14.8% on a 2-year stack.
Read all positive updates
Company Guidance
Management offered directional FY2026 guidance rather than numeric targets, focusing on operational priorities and timing: complete the 10‑year Metro Supply Chain distribution transition by July 2026, reduce overall marketing spend while reallocating to higher‑return channels, deepen inventory for priority collections to recapture Q4 stockout demand, and continue scaling AI for allocation, personalization and customer service. These actions are intended to build on FY2025 results (FY sales $277.7M, +5.6%; Q4 sales $115.5M, +4.2%; DTC FY $239.5M, +7.3%; Q4 DTC $107M, +5.7%; Q4 comp +7.3% / +14.8% 2‑yr stack; FY comp +9.5% / +12.8% 2‑yr) and preserve margin momentum (FY gross margin 61.3%, +150 bps; FY DTC GM 63.4%, +80 bps; Q4 GM 61.8%, +50 bps) while managing short‑term FX, distribution transition and freight pressures. They also reiterated a conservative capital posture (net debt $4.3M, -42% YoY; net leverage <0.2x; liquidity $73.6M = $28.6M cash + $45M capacity) and continued share buybacks (FY repurchases 1.28M shares for $4.0M; Q4 repurchases ~264k for $0.9M; ~60k NCIB shares remaining).Roots Corporation Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
71
Positive
Cash Flow
78
Positive
| Breakdown | Jan 2026 | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 277.68M | 262.92M | 262.67M | 272.12M | 273.83M |
| Gross Profit | 142.39M | 157.13M | 152.46M | 156.98M | 162.86M |
| EBITDA | 14.74M | -6.68M | 41.92M | 47.38M | 69.44M |
| Net Income | 4.67M | -33.44M | 1.84M | 6.69M | 22.76M |
Balance Sheet | |||||
| Total Assets | 317.50M | 329.04M | 369.86M | 391.89M | 393.70M |
| Cash, Cash Equivalents and Short-Term Investments | 28.63M | 34.02M | 28.03M | 31.92M | 34.16M |
| Total Debt | 106.69M | 119.88M | 124.88M | 137.16M | 148.92M |
| Total Liabilities | 159.59M | 169.51M | 179.04M | 203.85M | 207.65M |
| Stockholders Equity | 157.92M | 159.53M | 190.82M | 188.04M | 186.06M |
Cash Flow | |||||
| Free Cash Flow | 25.42M | 25.63M | 33.86M | 22.95M | 52.06M |
| Operating Cash Flow | 31.90M | 32.33M | 38.70M | 29.30M | 56.47M |
| Investing Cash Flow | -6.51M | -6.70M | -5.13M | -6.35M | -4.41M |
| Financing Cash Flow | -30.78M | -19.64M | -37.45M | -25.19M | -27.06M |
Roots Corporation Technical Analysis
Positive
3.91
Price Trends
3.98
Positive
3.60
Positive
3.42
Positive
Market Momentum
0.15
Negative
80.98
Negative
91.83
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ROOT, the sentiment is Positive. The current price of 3.91 is below the 20-day moving average (MA) of 4.08, below the 50-day MA of 3.98, and above the 200-day MA of 3.42, indicating a bullish trend. The MACD of 0.15 indicates Negative momentum. The RSI at 80.98 is Negative, neither overbought nor oversold. The STOCH value of 91.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ROOT.
Roots Corporation Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$174.42M | 38.30 | 3.16% | ― | 5.61% | ― | |
75 Outperform | C$18.37B | 48.31 | 30.33% | ― | 35.21% | 80.50% | |
63 Neutral | C$9.35B | 15.52 | 10.24% | 3.17% | 0.86% | -26.59% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
58 Neutral | C$14.99B | 42.99 | 10.09% | 1.47% | 23.06% | -33.83% | |
54 Neutral | C$100.90M | -107.14 | -0.06% | ― | 0.40% | -108.80% | |
53 Neutral | C$1.33B | 59.06 | 4.29% | ― | 13.14% | -76.53% |
* Consumer Cyclical Sector Average
TSE:ROOT
Roots Corporation
4.56
1.49
48.53%
TSE:GIL
Gildan Activewear
80.37
16.36
25.55%
TSE:RET
Reitmans (Canada)
2.14
-0.41
-15.94%
TSE:CTC
Canadian Tire
208.08
-39.49
-15.95%
TSE:GOOS
Canada Goose Holdings
13.68
-1.59
-10.41%
TSE:ATZ
Aritzia
161.00
91.97
133.23%
Roots Corporation Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Roots Posts Higher Sales, Returns to Profit in Fiscal 2025 Amid Strategic Review
Positive
Apr 9, 2026
Roots Corporation reported a solid fourth quarter and fiscal 2025, with sales and profitability improving on the back of stronger direct-to-consumer performance and higher gross margins. The company also continued to reduce leverage and repurchase...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.