As the Canadian market experiences robust earnings growth, with fourth-quarter results showing a solid 12.3% year-over-year increase for the TSX, investors are keeping a close eye on potential opportunities amidst this positive momentum. In this environment, identifying undervalued stocks can be particularly rewarding, as they may offer significant upside potential when market conditions align favorably with their intrinsic value.

Top 10 Undervalued Stocks Based On Cash Flows In Canada

Name Current Price Fair Value (Est) Discount (Est) Pan American Silver (TSX:PAAS) CA$77.29 CA$132.62 41.7% Major Drilling Group International (TSX:MDI) CA$15.18 CA$21.93 30.8% Kits Eyecare (TSX:KITS) CA$20.91 CA$38.77 46.1% Haivision Systems (TSX:HAI) CA$8.94 CA$14.40 37.9% Gildan Activewear (TSX:GIL) CA$91.51 CA$162.16 43.6% Exchange Income (TSX:EIF) CA$100.44 CA$173.90 42.2% EQB (TSX:EQB) CA$110.18 CA$190.32 42.1% Colliers International Group (TSX:CIGI) CA$174.95 CA$251.45 30.4% Avino Silver & Gold Mines (TSX:ASM) CA$14.58 CA$23.36 37.6% Ag Growth International (TSX:AFN) CA$30.51 CA$49.70 38.6%

Click here to see the full list of 21 stocks from our Undervalued TSX Stocks Based On Cash Flows screener.

Underneath we present a selection of stocks filtered out by our screen.

Exchange Income

Overview: Exchange Income Corporation operates in aerospace and aviation services, equipment, and manufacturing sectors globally, with a market cap of CA$5.52 billion.

Operations: The company generates revenue from two main segments: Aerospace & Aviation, which contributes CA$1.93 billion, and Manufacturing, which adds CA$1.10 billion.

Estimated Discount To Fair Value: 42.2%

Exchange Income Corporation is trading at CA$100.44, significantly below its estimated future cash flow value of CA$173.9, suggesting it may be undervalued based on discounted cash flow analysis. Despite a forecasted earnings growth of 25.7% annually, interest payments remain poorly covered by earnings and significant insider selling occurred recently. The company secured a flexible CA$3.5 billion credit facility, enhancing financial stability but highlighting potential leverage concerns amidst dividend sustainability issues due to insufficient coverage by earnings or free cash flows.

Upon reviewing our latest growth report, Exchange Income's projected financial performance appears quite optimistic. Navigate through the intricacies of Exchange Income with our comprehensive financial health report here.TSX:EIF Discounted Cash Flow as at Feb 2026

EQB

Overview: EQB Inc., operating through its subsidiary Equitable Bank, offers personal and commercial banking services to retail and commercial clients in Canada, with a market cap of CA$4.05 billion.

Story Continues

Operations: The company generates revenue of CA$1.12 billion from its banking services provided to retail and commercial customers in Canada.

Estimated Discount To Fair Value: 42.1%

EQB is trading at CA$110.18, well below its estimated future cash flow value of CA$190.32, highlighting potential undervaluation. The company forecasts robust revenue growth of 39.7% annually, outpacing the market significantly, with earnings expected to grow at 31.5% per year. Despite a recent net loss and declining profit margins, EQB's share buyback program could enhance shareholder value by reducing outstanding shares by up to 5.94%.

Our expertly prepared growth report on EQB implies its future financial outlook may be stronger than recent results. Click here to discover the nuances of EQB with our detailed financial health report.TSX:EQB Discounted Cash Flow as at Feb 2026

Kits Eyecare

Overview: Kits Eyecare Ltd. operates a digital eyecare platform in the United States and Canada, with a market cap of CA$673.03 million.

Operations: The company generates revenue of CA$193.40 million from its eyewear product sales in the United States and Canada.

Estimated Discount To Fair Value: 46.1%

Kits Eyecare is trading at CA$20.91, significantly below its estimated future cash flow value of CA$38.77, suggesting potential undervaluation. The company has recently become profitable with earnings expected to grow substantially faster than the Canadian market at 62.4% annually over the next three years. Recent expansions in smart eyewear and retail locations, alongside a new asset-based lending facility with BMO, position Kits for continued growth and operational agility in meeting consumer demand.

According our earnings growth report, there's an indication that Kits Eyecare might be ready to expand. Dive into the specifics of Kits Eyecare here with our thorough financial health report.TSX:KITS Discounted Cash Flow as at Feb 2026

Summing It All Up

Investigate our full lineup of 21 Undervalued TSX Stocks Based On Cash Flows right here. Have a stake in these businesses? Integrate your holdings into Simply Wall St's portfolio for notifications and detailed stock reports. Streamline your investment strategy with Simply Wall St's app for free and benefit from extensive research on stocks across all corners of the world.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include TSX:EIF TSX:EQB and TSX:KITS.

This article was originally published by Simply Wall St.

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