Thursday's small-cap stocks to watch

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Inside the Market's roundup of some of the Canadian small caps making news and on the move today. This post will be updated during the trading day.

Redknee Solutions Inc. reported a net loss of 6 cents per share, compared with flat profits a year ago, as revenues rose 9 per cent in its fiscal third-quarter.

The earnings report was a big disappointment for the Street. Shares in the software products provider closed down nearly 15 per cent and was the top decliner on the TSX.

Cantor Fitzgerald analyst Justin Kew commented, "This was a messy quarter with revenue in line but with a surprising EBITDA loss, the first since the NSN BSS acquisition business closed. The EBITDA miss was attributed to a large $9-million order that slipped from this quarter. Management is also undertaking a restructuring of the NSN BSS business and expects to take a $15-million to $20-million charge to realize annualized savings of approximately $30-million to $35-million. Management believes that they can achieve mid-teens EBITDA margins over the next four quarters. We have pared back our EBITDA expectations and focus on our positive long-term outlook on the stock: the stickiness of the support revenue, the solid backlog and the clean balance sheet."

Mr. Kew also cut his price target, to $5.50 (Canadian) from $7.75, while maintaining a "buy" rating.

Redknee is one of the stocks chosen by Globe Investor contributor Chris Umiastowski for his Strategy Lab growth portfolio, which can be seen here.

Mr. Umiastowski isn't too discouraged. "The Street doesn't seem to like the weaker-than-expected gross margin from Redknee's latest quarter," he commented to Inside the Market this afternoon. "Redknee is digesting a major acquisition and they're spending more on labour (to implement software) than they'd like. As a long-term investor, I don't expect a smooth ride, so bumps like this don't bother me so long as the overall growth trajectory is still intact, which it appears to be."

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Copper Mountain Mining Corp. announced that construction of its $40-million secondary crusher has been completed on-time and on-budget.

Laurentian Bank analyst Chris Chang commented in a note, "We are impressed that the company was able to advance construction of the secondary crusher ahead of our expectations (Q1/15) and within the $40 million budget. We believe the start-up of the secondary crusher is the key catalyst in the company's operational turnaround. As a result, we anticipate significant cash flow growth in future periods largely driven by unit cost improvements."

He has a "buy" rating and $3.50 (Canadian) price target on the company's shares. Shares rose 3.7 per cent Thursday to $2.75.

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Essential Energy Services Ltd. posted revenues of $52.8-million, up 37 per cent from this time last year. The company beat expectations of a loss of 6 cents per share with a loss of 4 cents per share, as customer demand was up. A less severe spring break-up, which typically sees drilling activity halted as thawing earth turns dirt roads into a soft mess, also helped to improve earnings.

TD Securities this morning upgraded Essential Energy Services to "buy" from "hold" after reviewing the results and cut its price target to $3 (Canadian) from $3.25. And Canaccord Genuity upgraded Essential Energy Services to "buy" from "hold" while keeping its $3.25 price target.

TD analyst Scott Treadwell said in a note this morning that the stock's 20 per cent pullback since late June presents a buying opportunity. He commented: "Essential's Q2 results were well ahead of forecasts, with nearly the entire business exceeding expectations. Well servicing activity was strong as mild weather in Q2 boosted operating hours along with increased producer urgency in the period. Tools exceeded our expectations, driven mostly by improving results from specialty rentals and conventional downhole tools. Essential's Tryton multi-stage group continued to respond to changing industry dynamics, with varying success."

Shares in the company rose 3.8 per cent Thursday.

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Trinidad Drilling Ltd. posted an adjusted 4-cent loss compared to analyst estimates of a 3-cent gain per share. Revenues were more or less the same as this time last year, up 2.1 per cent to $168.9-million. Trinidad's CEO said in a statement  that the quarter was a "transitional quarter," with the company having experienced higher-than-expected repair and maintenance costs as rigs were re-activated. The company's U.S. and international division also moved rigs to new customers and locations.  The company expects to see revenues improve as U.S. rigs continue operations.

TD Securities analyst Scott Treadwell commented, "Trinidad's Q2 results were well below expectations, even after removing impairment charges. Although utilization was slightly better than our forecast, U.S. day rates were below our estimate as rig mix and some utilization gaps in top-tier units were a surprise. The company recorded strong revenue and EBITDAS from its JV partnership, with more rigs moving to the operation through the rest of the year and into 2015. Most concerning in our eyes is the lack of new build activity for Trinidad in its domestic market at a time when the peers are messaging a fully contracted rig build program into 2015. Given Trinidad's expertise, we believe that new builds are likely to come, but had expected some build activity by this point."

The analyst cut his price target to $14 from $16 but maintained a "buy" rating. The stock closed down 4.1 per cent Thursday.

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Semafo Inc. reported its second-quarter results, commenting that it achieved its expected production and total cash costs thanks to a full mining rate at its Siou and Fofina gold projects. Net income was 5 cents a share, beating Street estimates of 5 cents.

The stock was up 9 per cent in afternoon trading and earlier today hit a new 52-week high of $5.48. But it's still trading at less than half the value it was in late 2010.

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Newalta Corp. posted an EPS of 4 cents per share, while its comparable adjusted EPS of 21 cents missed expectations of 27 cents. Contributions to growth investments propelled revenues up 9 per cent to $213.1-million, while adjusted EBITDA was up 20 per cent to $46-million compared to the previous year.

TD Securities analyst Scott Treadwell commented that EBITDA results were in line with expectations, as better-than-expected cost savings made up for a slight shortfall in revenue in the industrial segment. He commented, "Newalta delivered an as-expected quarter and remains on track to achieve 20 per cent EBITDAS growth this year. The company continues to examine alternatives for its Industrial group, which we expect to deliver news flow before the end of the year. With costs under scrutiny and activity picking up, we see continued upside to the company's margins from current levels."

Mr. Treadwell reiterated his "buy" rating and $23 (Canadian) price target.

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Morguard North American Residential REIT beat analyst expectations of 23 cents with an EPS of 24 cents. The REIT reported that revenues had increased to $43-million from $34.7-million a year the before, driven by increases in net operating income and changes in foreign exchange rates.

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NexGen Energy Ltd. announced first assay results from its summer 2014 drilling program on its 100 per cent-owned Rook I property located in the south-western portion of the Athabasca Basin. Hole AR-14-15 had results that are similar in quality to some of the other notable holes reported in the region. As a result of this success, management has increased the 2014 summer drill program to 18,500 metres from 13,500 metres.

Cantor Fitzgerald analyst Rob Chang reviewed the results and said this morning in a note, "NexGen Energy has hit a world-class calibre hole at its Arrow Discovery, which is located adjacent to Fission Uranium's Patterson Lake South project. This news lends further credence that we have district scale uranium mineralization in the south-western portion of the Athabasca Basin." He does not rate NexGen.

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Primero Mining Corp. announced mixed news today as it reported a second-quarter earnings miss but offset that with an approval of the expansion of its flagship San Dimas mine in Mexico to 3,000 tonnes per day.

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Veresen Inc. posted disappointing second-quarter results, reporting a loss of 1 cent per share versus the street expectations of a 4-cent gain. Net loss totaled $2.4-million, down from the $11.5-million net income of the same period last year, with the poor results mainly due to higher project development spending related to the company's LNG project in Oregon, lower midstream earnings, and the revaluation of the York Energy Centre interest rate hedge.

Veresen also narrowed its guidance for 2014 distributable cash to be in the range of $1.02 per common share to $1.20 per common share, with a midpoint of $1.11 per common share. It previously set the low end at 97 cents, and the midpoint at $1.09.

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Things are beginning to look up for Silver Standard Resources Inc. which beat expectations with a 9 cent loss per share compared to the consensus of a 15 cents loss. The company said that since the closing of its acquisition of an open pit mine in Nevada in April, silver-equivalent production has increased by 81 per cent and sales have increased 91 per cent. Revenues are up almost 10 per cent from the year before to $36.2-million from $32.6-million. Shares fell 41 per cent in the months following lacklustre first-quarter results, though prices have rebounded some of that amount since June.

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Bird Construction Inc. posted second quarter revenues of $328.8-million, up from $312.3-million last year. Net income also rose to $10-million from $0.3-million, while the company's EPS of 24 cents appeared to beat expectations of 13 cents by a wide margin. Bird said that its record backlog has helped its bottom line, noting its $715.5-million dollars' worth of  new construction contracts. The contracts are expected to last through to the end of the year.

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Just Energy Group Inc. reported its fiscal second-quarter results, showing a loss per share from continuing operations of 32 cents, worse than the 28 cents loss of a year ago. It said its results are consistent with its earlier guidance rage for EBITDA from continuing operations.

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Stantec Inc. reported second-quarter revenues rose 11.8 per cent to $633.8-million, while diluted earnings per share rose 20.5 per cent to 94 cents. "As we move into the second half of the year, Stantec's performance continues to meet expectations and deliver solid results," commented Bob Gomes, Stantec president and chief executive officer.

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Mandalay Resources Corp. reported revenues of $44.9-million for the second quarter, up from last year's $35.9-million, though its EPS of 1 cent missed estimates of 4 cents. Mandalay has just come of an acquisition of Elgin Mining Inc, along with securing a $60-million debt to fund a mining project in Chile. Shares have gained 52 per cent year-to-date.

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Vicwest Inc. fell well below street expectations in the second quarter, reporting a loss of 16 cents per share compared to the estimates of a 4-cent gain. Though revenues rose 16.5 per cent from the year prior to $113.2-million from $97.1-million, the company also absorbed $5.2 million in unrecovered steel costs. VicWest said that the company has raised prices in response, though revenues would not reflect the price hike until the third quarter.

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Arsenal Energy Inc. has announced a 7.7 per cent dividend increase to 7 cents per share from 6.5 cents. The increase is the second one of 2014, with the company having increased its dividend by 50 per cent back in May. The dividend hike is consistent with Arsenal's policy of 10 per cent of trailing quarterly cash flow.

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Extendicare Inc. appeared to come in well under estimates in the second quarter with a 19 cent loss per share compared to the expectations of a 10-cent gain. Revenues were up slightly from last year to $531.6-million from $498.5-million. The company's U.S. operations have settled for $38-million with the U.S. Department of Justice, the U.S. Department of Health and Human Services and multiple states over claims of negligence at its nursing homes.  The company will maintain a compliance program at all of its U.S. nursing homes, in addition to retaining a third-party monitor as required by the CIA. Extendicare also announced that all of its nursing homes in Pennsylvania, Delaware and West Virginia are to be leased, as the number of liability claims coming from its operations there have increased 300 per cent over the past few years.

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Real estate services company Altus Group Limited posted second-quarter revenues of $90.3-million, up from $78.5-million, but missed street expectations. The company reported a loss of 2 cents per share, and its comparable adjusted EPS gain of 28 cents also fell short of estimates of 31 cents. The company said it experienced strong sector performance in Western Canada, leading to a 19 per cent growth in gross revenues, while initiatives and acquisitions in the U.S. drove another 33 per cent increase in gross revenues. Shares have risen 34 per cent so far this year.

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Strad Energy Services came in well above street expectations, reporting an EPS of 13 cents compared to estimates of 5 cents. Revenues increased 8 per cent to $53.7-million this quarter compared t last year, while EBITDA increased 40 per cent to $12.3-million. The company has rebounded from lower product sales last year with higher equipment utilization this year from a larger rental demand due to increased drilling activity in the western Canadian sedimentary basin. Strad shares have risen almost 19 per cent in the past year to date.

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Savaria Corp. disclosed its results for its second quarter, showing a 13 per cent rise in revenue to a record $22-million.

(This post corrects an earlier version that contained some inaccurate information on Veresen's guidance for distributable cash.)