Stella-Jones (TSE:SJ) Posts Earnings Results

Stella-Jones (TSE:SJ) posted its quarterly earnings results on Wednesday. The company reported C$1.39 earnings per share 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 Trading Down 7.5%

Shares of Stella-Jones stock opened at C$61.92 on Thursday. Stella-Jones has a 52-week low of C$58.37 and a 52-week high of C$101.31. The stock’s 50-day simple moving average is C$67.27 and its 200 day simple moving average is C$80.09. The stock has a market capitalization of C$3.38 billion, a P/E ratio of 13.12, a P/E/G ratio of 2.40 and a beta of -0.12. The company has a debt-to-equity ratio of 75.40, a quick ratio of 1.20 and a current ratio of 5.25.

Wall Street Analyst Weigh In

Several brokerages have commented on SJ. Desjardins lowered their price objective on shares of Stella-Jones from C$104.00 to C$99.00 and set a “buy” rating on the stock in a research report on Friday, August 7th. Canadian Imperial Bank of Commerce reduced their target price on shares of Stella-Jones from C$87.00 to C$82.00 in a research report on Thursday, July 9th. National Bank Financial decreased their price target on shares of Stella-Jones from C$95.00 to C$92.00 and set a “sector perform” rating for the company in a research note on Friday, August 7th. Raymond James Financial decreased their price target on shares of Stella-Jones from C$90.00 to C$83.00 and set an “outperform” rating for the company in a research note on Friday, August 7th. Finally, Scotiabank lowered their price target on shares of Stella-Jones from C$93.00 to C$85.00 and set a “sector outperform” rating on the stock in a report on Wednesday, August 12th. Five equities research analysts have rated the stock with a Buy rating and two have given a Hold rating to the stock. Based on data from MarketBeat.com, the stock presently has an average rating of “Moderate Buy” and a consensus target price of C$89.62.

About Stella-Jones

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.