Stella-Jones (TSE:SJ) Posts Earnings Results

Stella-Jones (TSE:SJ) posted its earnings results on Thursday. The company reported C$1.59 earnings per share for the quarter, FiscalAI reports. The business had revenue of C$1.04 billion during the quarter. Stella-Jones had a return on equity of 14.85% and a net margin of 8.66%.

Here are the key takeaways from Stella-Jones’ conference call:

• Second-quarter profitability declined: Adjusted EBITDA fell to CAD 167 million, with margin decreasing to 16% from 18.3% a year earlier. Higher environmental and maintenance costs, fuel expenses, steel-structure expansion inefficiencies, and delayed pricing recovery weighed on results.
• Utility products remained the main growth driver: Sales rose 7% to CAD 510 million, supported by the Crossarms acquisition and continued wood utility pole volume growth. Management maintained its full-year mid-single-digit organic growth outlook for wood utility poles despite weather-related delays in Texas.
• Margin recovery and efficiency initiatives are expected: Management said normalized second-quarter margin would have been approximately 17.5% and expects improvement in the second half as steel-structure inefficiencies and one-time costs ease. Pole and railway-tie network optimization initiatives are expected to generate approximately CAD 10–12 million and CAD 10–15 million, respectively, in annual profitability improvements beginning in 2027.
• Railway ties faced lower Class I volumes but commercial demand helped offset the decline: First-half sales were down 2%, while management expects full-year volumes to range from flat to down 2%. Treating-services-only, or TSO, volumes are expected to represent 5%–10% of tie sales going forward, improving returns but reducing reported revenue per unit.
• Growth capacity and balance-sheet flexibility remain strong: Candiac’s steel-structure modernization is on track to double capacity to 20,000 tons by the third quarter, with substantial demand secured through 2027, while the planned Fayetteville facility is expected to add another 20,000 tons by 2028. The company also reduced net debt by more than CAD 100 million in the first half and ended the quarter with CAD 759 million of liquidity.

Stella-Jones Stock Down 5.8%

Shares of TSE SJ traded down C$4.56 during midday trading on Thursday, reaching C$74.62. 522,950 shares of the company’s stock were exchanged, compared to its average volume of 150,413. The business’s fifty day moving average price is C$79.54 and its two-hundred day moving average price is C$85.48. The company has a debt-to-equity ratio of 80.71, a quick ratio of 1.20 and a current ratio of 4.96. Stella-Jones has a 52-week low of C$69.94 and a 52-week high of C$101.31. The stock has a market capitalization of C$4.07 billion, a PE ratio of 13.52, a price-to-earnings-growth ratio of 2.40 and a beta of -0.07.

Wall Street Analysts Forecast Growth

SJ has been the subject of several research analyst reports. Scotiabank decreased their price objective on Stella-Jones from C$99.00 to C$97.00 and set a “sector outperform” rating for the company in a report on Tuesday, April 28th. Raymond James Financial dropped their price objective on shares of Stella-Jones from C$95.00 to C$90.00 and set an “outperform” rating on the stock in a research note on Monday, July 27th. TD decreased their price target on Stella-Jones from C$106.00 to C$93.00 and set a “buy” rating for the company in a report on Monday, May 11th. Desjardins reduced their price target on shares of Stella-Jones from C$107.00 to C$104.00 and set a “buy” rating on the stock in a report on Thursday, May 7th. Finally, Canadian Imperial Bank of Commerce dropped their price objective on shares of Stella-Jones from C$87.00 to C$82.00 in a research note on Thursday, July 9th. Five investment analysts have rated the stock with a Buy rating and three have issued a Hold rating to the company. According to MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average price target of C$93.75.

Insider Buying and Selling at Stella-Jones

In other Stella-Jones news, Director Kevin Patrick Comerford acquired 500 shares of Stella-Jones stock in a transaction dated Monday, May 11th. The stock was acquired at an average cost of C$72.06 per share, for a total transaction of C$36,030.00. Following the completion of the transaction, the director owned 6,176 shares in the company, valued at approximately C$445,042.56. This represents a 8.81% increase in their position. Also, Director Kenner James bought 937 shares of the company’s stock in a transaction dated Tuesday, May 12th. The stock was purchased at an average cost of C$73.22 per share, for a total transaction of C$68,607.14. Following the completion of the transaction, the director owned 1,834 shares of the company’s stock, valued at C$134,285.48. This represents a 104.46% increase in their ownership of the stock. Insiders purchased a total of 3,443 shares of company stock worth $247,814 over the last ninety days. Company insiders own 0.14% of the company’s stock.

About Stella-Jones

Stella-Jones Inc produces and sells lumber and wood products. The company operates in two segments: Pressure-treated wood, which includes utility poles, railway ties, residential lumber, and industrial products; and Logs & Lumber segment comprises of the sales of logs harvested in the course of the company’s procurement process that is determined to be unsuitable for use as utility poles, it also includes the sale of excess lumber to local home-building markets. The vast majority of its revenue comes from the Pressure-treated wood segment.