Stella-Jones (TSE:SJ) Releases Earnings Results

Stella-Jones (TSE:SJ) announced its quarterly earnings data on Wednesday. The company reported C$1.39 EPS for the quarter, FiscalAI reports. The company had revenue of C$979.00 million during the quarter. Stella-Jones had a net margin of 7.36% and a return on equity of 12.35%.

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

• Third-quarter adjusted EBITDA fell to CAD 159 million from CAD 171 million, and margin declined to 16.2% from 17.8%. Management attributed the pressure mainly to roughly CAD 10 million in higher fuel costs and delayed residential lumber price increases.
• The new Performance Optimization Program targets up to CAD 100 million in cumulative savings and incremental profitability over three years, with benefits building over time. Management expects margins to progress toward its 17.5%–18.5% target, likely closer to 2028 than 2027.
• Wood utility pole volumes grew 3% in the quarter and 5% year to date, and management expects mid-single-digit volume growth to continue into 2027. A greater share of lower-priced southern yellow pine weighed on pricing and mix, however.
• Railway tie margins improved as stronger commercial activity and a more favorable product mix offset lower Class 1 demand; contract renewals are adding commitments and opportunities in higher-value products. Management expects Q4 activity to ease seasonally but sees potential for slightly higher organic growth in the category next year.
• Steel structure expansion has weighed on throughput, but Candiac is targeting full run rate by the end of Q1 2027, with demand supporting a growing order book. Net debt fell by nearly CAD 200 million in the first nine months, leverage ended at 2.4 times, and liquidity was CAD 836 million.

Stella-Jones Price Performance

Shares of SJ opened at C$65.01 on Friday. The firm has a market capitalization of C$3.55 billion, a PE ratio of 13.77, a PEG ratio of 2.40 and a beta of 0.06. The company’s 50-day moving average is C$67.19 and its 200-day moving average is C$79.97. Stella-Jones has a fifty-two week low of C$58.37 and a fifty-two week high of C$101.31. The company has a debt-to-equity ratio of 75.40, a current ratio of 5.25 and a quick ratio of 1.20.

Analysts Set New Price Targets

Several equities research analysts recently issued reports on the stock. Royal Bank Of Canada cut their target price on shares of Stella-Jones from C$76.00 to C$70.00 and set a “sector perform” rating for the company in a research note on Thursday. TD lowered their price target on Stella-Jones from C$93.00 to C$81.00 and set a “buy” rating on the stock in a research report on Thursday. Scotiabank dropped their price objective on Stella-Jones from C$79.00 to C$76.00 and set a “sector outperform” rating on the stock in a research note on Thursday. National Bank Financial cut their price objective on Stella-Jones from C$92.00 to C$80.00 and set a “sector perform” rating for the company in a research report on Thursday. Finally, Raymond James Financial reduced their target price on Stella-Jones from C$83.00 to C$80.00 and set an “outperform” rating for the company in a research note on Thursday. Five research analysts have rated the stock with a Buy rating and two have given a Hold rating to the company’s stock. According to MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and an average price target of C$81.62.

Key Headlines Impacting Stella-Jones

Here are the key news stories impacting Stella-Jones this week:

• Positive Sentiment: Management outlined up to $100 million in cost savings over three years and expects its Candiac facility to reach full operating run rate by the end of Q1 2027. If achieved, these measures could improve efficiency and profitability. Stella-Jones outlines cost savings and Candiac production plans
• Positive Sentiment: The company announced a normal course issuer bid to repurchase up to 1.5 million shares, or about 2.75% of its issued share capital. Buybacks can support per-share results and signal confidence in the business. Stella-Jones announces equity buyback
• Positive Sentiment: A cash-flow valuation commentary argues that Stella-Jones shares look below fair value, which may appeal to value-focused investors. Stella-Jones stock valuation commentary
• Negative Sentiment: Third-quarter adjusted earnings fell even as sales rose, raising concerns about profitability. Stella-Jones Q3 earnings and sales
• Negative Sentiment: Several analysts lowered their price targets, including Raymond James, Desjardins, Scotiabank, TD, RBC and National Bank Financial. Their ratings remain generally constructive, but the revisions point to more cautious expectations; new targets range from C$70 to C$81. Raymond James price-target revision

Stella-Jones Company Profile

Stella-Jones Inc (TSX: SJ) is a leading North American manufacturer of products focused on supporting infrastructure essential to the electrical distribution and transmission network, and the operation and maintenance of railway transportation systems. It supplies the continent’s major electrical utility companies with treated wood poles and crossarms, steel lattice towers and steel transmission poles, as well as North America’s Class 1, short line and commercial railroad operators with treated wood railway ties.