ATS Corp (ATS)

Price$19.65Cached quoteAs of 2026-09-08 05:25 UTC

AI: Fair-priced

Price checkValuation looks mixed: cheap on sales and cash flow, expensive on reported earnings, with major execution risk.

ATS Corporation trades under ATS on both the Toronto Stock Exchange and New York Stock Exchange. The stock sits near the bottom of its recent trading range after a sharp post-earnings decline. AAII’s September 3 snapshot showed a low price-to-sales ratio and low price-to-free-cash-flow ratio, but a high price-to-earnings ratio and above-median enterprise-value-to-EBITDA ratio. That mix argues against calling the shares clearly cheap or clearly expensive today.

Big pictureCash generation improved dramatically last year, but the newest quarter showed weaker demand and renewed cash pressure.

Fiscal 2026 produced C$371.7 million of free cash flow, meaning operating cash left after capital spending, and net debt leverage improved to 2.8 times adjusted EBITDA from 3.9 times a year earlier. EBITDA is a rough operating-profit measure before interest, taxes, depreciation and amortization. In fiscal Q1 2027, revenue fell 5.8%, bookings fell 5.3%, backlog fell 8.7%, and free cash flow turned negative at C$25.9 million, showing continued exposure to customer investment cycles and project timing.

Business strengthDiversified automation markets, recurring service revenue and ample credit support resilience, while leverage remains meaningful.

ATS serves life sciences, energy, food and beverage, and industrial markets, limiting dependence on one customer cycle. Management expects recurring revenue, such as services and regularly purchased products, to remain roughly 25% to 35% of trailing sales. At June quarter-end, ATS had C$198.9 million of cash and about C$1.0 billion of unused multipurpose credit, with all covenants met. Debt is manageable but not light: net debt was 2.9 times pro forma adjusted EBITDA.

What could change the storyMargin recovery could unlock value; weaker bookings, persistent cash burn or rising leverage would justify a lower valuation.

The bull case needs Q2 revenue to land within management’s C$660 million to C$700 million range, the first European cost phase to deliver roughly C$20 million of annual savings, margins to move toward the 15% long-term target, free cash flow to rebound, and leverage to fall below roughly 2.5 times EBITDA. The bear case is continued backlog erosion, Q2 revenue below guidance, restructuring costs arriving faster than savings, negative free cash flow persisting, or leverage moving above the company’s 3.0-times target ceiling. Active buybacks help, but stock awards can dilute shareholders.

AI: News

Buybacks accelerated in AugustATS said August repurchases reached 1.12 million shares, signaling confidence while debt reduction and acquisitions still compete for capital.

On September 3, ATS said it had repurchased 1,119,413 common shares through August under its normal course issuer bid, a Canadian share-repurchase program. The company can buy up to 8,225,621 shares for cancellation through December 21, 2026 and said it expects to remain active. Buybacks can raise each remaining shareholder’s ownership percentage, but ATS also carries meaningful debt and continues to view acquisitions as part of its capital-allocation strategy.

Quarter miss, restructuring launchedFiscal Q1 revenue, earnings, bookings and backlog declined, prompting an 18-month fixed-cost transformation focused first on Europe.

On August 6, ATS reported fiscal Q1 2027 revenue of C$693.7 million, down 5.8% year over year, with adjusted EBITDA down 8.5% and a small net loss. Order bookings fell 5.3% and backlog fell 8.7%. Management launched an approximately 18-month fixed-cost transformation program, starting with European facility consolidation. The initial phase targets about C$20 million of annual cost reductions and represents roughly 30% of the broader savings opportunity.

Fiscal 2026 cash reboundFiscal 2026 free cash flow recovered sharply and leverage fell, but backlog and bookings ended below prior-year levels.

On May 28, ATS reported fiscal 2026 revenue of C$2.97 billion and adjusted EBITDA of C$413.0 million. Free cash flow improved to C$371.7 million from negative C$52.3 million in fiscal 2025, helped heavily by working-capital release. Net debt leverage fell to 2.8 times adjusted EBITDA from 3.9 times. However, full-year bookings declined and year-end backlog was lower, leaving the company dependent on new project awards and successful margin improvements.

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Revenue

2023

2024

2025

2026

Net income

2023

2024

2025

2026

Free cash flow

2023

2024

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2026

Total cash / debt

CashTotal debt

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2026

Financial statements

	2026	2025	2024	2023
Revenue	$2.97B	$2.53B	$3.03B	$2.58B
Gross profit	$850.9M	$646.6M	$855.5M	$725.8M
Gross margin	28.62%	25.53%	28.21%	28.16%
Research & development	—	$10.6M	$10.2M	—
Operating expenses	$629.0M	$637.4M	$540.1M	$503.3M
Operating income	$221.9M	$9.3M	$315.4M	$222.5M
Operating margin	7.46%	0.37%	10.40%	8.63%
EBITDA	$363.6M	$168.0M	$458.5M	$349.9M
EBITDA margin	12.23%	6.63%	15.12%	13.58%
Net income	$71.6M	−$28.0M	$194.2M	$127.7M
Net profit margin	2.41%	−1.10%	6.40%	4.95%
Basic EPSper basic share	CA$0.73	-CA$0.29	CA$1.98	CA$1.39
Diluted EPSper diluted share	CA$0.73	-CA$0.29	CA$1.97	CA$1.38