TSX:ROOT

Stock Analysis Report

Executive Summary

Roots Corporation, together with its subsidiaries, provides women’s, men’s, kids, toddler, and baby apparel; leather goods; footwear; and accessories under the Roots brand.


Snowflake Analysis

Fair value with imperfect balance sheet.

Share Price & News

How has Roots's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ROOT's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

7.9%

ROOT

7.9%

CA Specialty Retail

6.3%

CA Market


1 Year Return

-85.1%

ROOT

-39.5%

CA Specialty Retail

-19.7%

CA Market

Return vs Industry: ROOT underperformed the Canadian Specialty Retail industry which returned -39.5% over the past year.

Return vs Market: ROOT underperformed the Canadian Market which returned -19.7% over the past year.


Shareholder returns

ROOTIndustryMarket
7 Day7.9%7.9%6.3%
30 Day-55.6%-23.8%-5.3%
90 Day-65.3%-33.6%-20.3%
1 Year-85.1%-85.1%-37.6%-39.5%-17.0%-19.7%
3 Yearn/a-46.2%-50.7%-7.9%-16.5%
5 Yearn/a-40.6%-48.7%3.7%-11.8%

Price Volatility Vs. Market

How volatile is Roots's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Roots undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ROOT (CA$0.68) is trading below our estimate of fair value (CA$1.77)

Significantly Below Fair Value: ROOT is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ROOT is poor value based on its PE Ratio (34.8x) compared to the Specialty Retail industry average (10.1x).

PE vs Market: ROOT is poor value based on its PE Ratio (34.8x) compared to the Canadian market (11.7x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate ROOT's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: ROOT is good value based on its PB Ratio (0.1x) compared to the CA Specialty Retail industry average (0.9x).


Next Steps

Future Growth

How is Roots forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

-1.1%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if ROOT's forecast earnings growth is above the savings rate (1.4%).

Earnings vs Market: Insufficient data to determine if ROOT's earnings are forecast to grow faster than the Canadian market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ROOT's revenue is expected to decline over the next 3 years (-1.1% per year).

High Growth Revenue: ROOT's revenue is forecast to decline over the next 3 years (-1.1% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if ROOT's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Roots performed over the past 5 years?

11.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ROOT has a large one-off loss of CA$5.6M impacting its November 2 2019 financial results.

Growing Profit Margin: ROOT's current net profit margins (0.2%) are lower than last year (4.3%).


Past Earnings Growth Analysis

Earnings Trend: ROOT's earnings have grown by 11.2% per year over the past 5 years.

Accelerating Growth: ROOT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ROOT had negative earnings growth (-94.1%) over the past year, making it difficult to compare to the Specialty Retail industry average (-3.7%).


Return on Equity

High ROE: ROOT's Return on Equity (0.4%) is considered low.


Next Steps

Financial Health

How is Roots's financial position?


Financial Position Analysis

Short Term Liabilities: ROOT's short term assets (CA$85.3M) exceed its short term liabilities (CA$75.9M).

Long Term Liabilities: ROOT's short term assets (CA$85.3M) do not cover its long term liabilities (CA$272.9M).


Debt to Equity History and Analysis

Debt Level: ROOT's debt to equity ratio (68.1%) is considered high.

Reducing Debt: Insufficient data to determine if ROOT's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: ROOT's debt is well covered by operating cash flow (31.5%).

Interest Coverage: ROOT's interest payments on its debt are not well covered by EBIT (1.6x coverage).


Balance Sheet


Next Steps

Dividend

What is Roots's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate ROOT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate ROOT's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ROOT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ROOT's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ROOT's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

0.8yrs

Average management tenure


CEO

Meghan Roach

0.25

Tenure

Ms. Meghan Roach has been Interim Chief Executive Officer of Roots Corporation since January 03, 2020. She served as Interim Chief Financial Officer at Roots Corporation since August 9, 2019 until 2020. Ms ...


Leadership Team

NamePositionTenureCompensationOwnership
James Connell
Chief e-Commerce & Customer Experience Officer1.42yrsCA$360.59kno data
Meghan Roach
Interim Chief Executive Officer0.25yrno datano data
Mona Kennedy
Chief Financial Officer0.25yrno datano data
Kristen Davies
Head of Investor Relationsno datano datano data
Kaleb Honsberger
VP & General Counselno datano datano data
Karen Zuccala
Vice President of Marketing1.42yrsno datano data
Michelle Lettner
Vice President of Human Resourcesno datano datano data

0.8yrs

Average Tenure

Experienced Management: ROOT's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Dale Lastman
Lead Director2.5yrsCA$119.00kno data
Erol Uzumeri
Chairman of the Boardno datano datano data
Eric Zinterhofer
Director4.33yrsno datano data
Joel Teitelbaum
Independent Director3yrsCA$105.00kno data
Richard Mavrinac
Independent Director2.5yrsCA$115.00kno data
Mary Curran
Independent Director1.83yrsCA$70.00kno data
Gregory David
Independent Director2.5yrsCA$104.00kno data

2.5yrs

Average Tenure

52yo

Average Age

Experienced Board: ROOT's board of directors are not considered experienced ( 2.5 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Roots Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Roots Corporation
  • Ticker: ROOT
  • Exchange: TSX
  • Founded: 1973
  • Industry: Apparel Retail
  • Sector: Retail
  • Market Cap: CA$28.645m
  • Shares outstanding: 42.12m
  • Website: https://www.roots.com

Number of Employees


Location

  • Roots Corporation
  • 1400 Castlefield Avenue
  • Toronto
  • Ontario
  • M6B 4C4
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ROOTTSX (The Toronto Stock Exchange)YesCommon SharesCACADOct 2017
4RODB (Deutsche Boerse AG)YesCommon SharesDEEUROct 2017
RROT.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDOct 2017

Biography

Roots Corporation, together with its subsidiaries, provides women’s, men’s, kids, toddler, and baby apparel; leather goods; footwear; and accessories under the Roots brand. The company operates through two segments, Direct-To-Consumer, and Partners and Other. The Direct-to-Consumer segment sells products through the company’s corporate retail stores and e-commerce. The Partners and Other segment engages primarily in the wholesale of Roots branded products to the company’s international operating partners. This segment is also involved in licensing Roots brand to manufacturing partners; wholesaling Roots branded products to retail partners; and selling custom Roots branded products to business clients. As of February 2, 2019, it operated 114 corporate retail stores in Canada, 7 corporate retail stores in the United States, 117 partner-operated stores in Taiwan, and 37 partner-operated stores in China, as well as e-commerce platforms. The company offers its products in approximately 50 countries. Roots Corporation was founded in 1973 and is headquartered in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/10 09:19
End of Day Share Price2020/04/09 00:00
Earnings2019/11/02
Annual Earnings2019/02/02


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.