As of May 31, 2025, Roots Corp has a Discounted Cash Flow (DCF) derived fair value of $0.00 per share. With the current market price at $3.08, this represents a potential upside of -523.7%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $0.00 |
| DCF Fair Value (10-year) | $0.00 |
| Potential Upside (5-year) | -821.9% |
| Potential Upside (10-year) | -523.7% |
| Discount Rate (WACC) | 3.9% - 5.3% |
Revenue is projected to grow from $263 million in 02-2025 to $357 million by 02-2035, representing a compound annual growth rate of approximately 3.1%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 02-2025 | 263 | 0% |
| 02-2026 | 279 | 6% |
| 02-2027 | 287 | 3% |
| 02-2028 | 302 | 5% |
| 02-2029 | 308 | 2% |
| 02-2030 | 318 | 3% |
| 02-2031 | 324 | 2% |
| 02-2032 | 331 | 2% |
| 02-2033 | 341 | 3% |
| 02-2034 | 348 | 2% |
| 02-2035 | 357 | 3% |
Net profit margin is expected to improve from -13% in 02-2025 to -5% by 02-2035, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 02-2025 | (33) | -13% |
| 02-2026 | (31) | -11% |
| 02-2027 | (28) | -10% |
| 02-2028 | (25) | -8% |
| 02-2029 | (22) | -7% |
| 02-2030 | (19) | -6% |
| 02-2031 | (18) | -6% |
| 02-2032 | (18) | -5% |
| 02-2033 | (18) | -5% |
| 02-2034 | (17) | -5% |
| 02-2035 | (17) | -5% |
with a 5-year average of $5 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 02-2026 | 6 |
| 02-2027 | 6 |
| 02-2028 | 6 |
| 02-2029 | 6 |
| 02-2030 | 6 |
| 02-2031 | 6 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 11 |
| Days Inventory | 145 |
| Days Payables | 0 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2026 | (27) | (12) | 5 | (2) | (19) |
| 2027 | (23) | (10) | 6 | (3) | (15) |
| 2028 | (19) | (9) | 6 | 3 | (18) |
| 2029 | (14) | (8) | 6 | (2) | (9) |
| 2030 | (9) | (7) | 6 | (1) | (8) |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 0.00 | -821.9% |
| 10-Year DCF (Growth) | 0.00 | -523.7% |
| 5-Year DCF (EBITDA) | 0.00 | -100.0% |
| 10-Year DCF (EBITDA) | 0.00 | -100.0% |
Is Roots Corp (ROOT.TO) a buy or a sell? Roots Corp is definitely a sell. Based on our DCF analysis, Roots Corp (ROOT.TO) appears to be overvalued with upside potential of -523.7%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider reducing exposure at the current market price of $3.08.