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Cascades (TSE:CAS)
TSX:CAS

Cascades (CAS) AI Stock Analysis

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Cascades

(TSX:CAS)

Rating:59Neutral
Price Target:
C$9.50
▲(5.56%Upside)
Cascades' overall stock score reflects a combination of stable revenue growth and solid cash flow management, offset by profitability challenges and valuation issues. The recent strategic financial initiatives and positive earnings call sentiment provide some optimism, though macroeconomic uncertainties and technical analysis suggest caution. The company's dividend yield adds some attractiveness to income-focused investors.

Cascades (CAS) vs. iShares MSCI Canada ETF (EWC)

Cascades Business Overview & Revenue Model

Company DescriptionCascades Inc. produces, converts, and markets packaging and tissue products in Canada and the United States. The company operates through three segments: Containerboard, Specialty Products, and Tissue Papers. It manufactures containerboards, as well as converts corrugated products. The company also offers uncoated recycled paperboards for use in packaging converters and industrial users of headers and wrappers for the paper industry, as well as partitions that are used as protective packaging; honeycomb paperboards for the beer, wine, and spirits industry; laminated paperboards for food packaging and furniture backing industries; and specialty containers, structural components, and paperboard and fiber composites. In addition, it provides egg filler flats and egg cartons for egg processors and four-cup carriers for the quick-service restaurant industry; polystyrene foam trays for processors and retailers in the food industry; rigid plastic packaging products for food industry, processors, and retailers; and flexible films for frozen foods, bakery, and ice industries. Further, the company offers bathroom and facial tissues, paper towels, paper hand towels and napkins, and other related products and services under the Cascades PRO Signature, Cascades PRO Perform, Cascades PRO Select, Cascades PRO Tandem, and Cascades PRO Tuff-Job brands; and under the Cascades Fluff, Cascades Tuff, and Satin Soft labels, as well as private labels and other secondary marks. Additionally, it offers services to recover and process discarded materials for the municipal, industrial, commercial, and institutional sectors. The company sells its products through own sales force and external representatives. Cascades Inc. was incorporated in 1964 and is headquartered in Kingsey Falls, Canada.
How the Company Makes MoneyCascades Inc. generates revenue through the sale of its packaging and tissue products, which are primarily made from recycled fibers. The company's revenue streams are diversified across its three main divisions: Containerboard, which includes the production and conversion of corrugated products; Boxboard Europe, which produces coated and uncoated recycled boxboard; and Specialty Products, which focuses on niche markets such as industrial packaging and consumer products. Cascades also benefits from strategic partnerships and long-term contracts with key clients, ensuring a steady demand for its sustainable products. Additionally, the company's emphasis on recycling and environmental stewardship helps reduce raw material costs and enhances its competitive edge in the market.

Cascades Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 2.08%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
While there is positive year-over-year performance in terms of sales and EBITDA, the quarter faced significant sequential declines, particularly in the tissue segment and due to challenges with Bear Island's ramp-up. Strategic focus on asset monetization and operational efficiencies provide some optimism, but the immediate outlook remains cautious due to macroeconomic uncertainties.
Q1-2025 Updates
Positive Updates
Year-Over-Year Sales Growth
Sales increased 4% year-over-year, driven by favorable exchange rates and selling prices despite a decrease in volume.
Consolidated EBITDA Increase
Consolidated EBITDA increased by 21% year-over-year, with stronger pricing in packaging activities offsetting lower volumes and higher costs.
Packaging Segment Performance
Year-over-year, packaging sales increased by 7% with EBITDA levels increasing 45%, driven by higher selling prices and lower raw material costs.
Strategic Asset Monetization
Cascades sold a closed tissue facility for US$8 million and aims to achieve $80 million from monetizing nonstrategic assets in the coming quarters.
Negative Updates
Sequential Sales and EBITDA Decline
Sales levels decreased 5% sequentially, and consolidated EBITDA decreased 14% from Q4, driven by lower volumes and higher operational costs.
Tissue Business Struggles
First quarter sales in the tissue segment decreased 8% sequentially, with EBITDA decreasing 18% due to lower volumes, higher energy costs, and increased freight costs.
Bear Island Ramp-Up Challenges
Bear Island's ramp-up is 20% behind the target ramp-up line, with production issues leading to delayed recovery times after breakdowns.
Increased Net Debt
Net debt increased by $120 million in the first quarter, primarily due to working capital requirements and higher inventories.
Company Guidance
During the first quarter of 2025, Cascades reported a 5% sequential decrease in sales due to lower volumes, although sales increased by 4% year-over-year due to favorable exchange rates and selling prices. Consolidated EBITDA stood at $125 million, a 14% decrease from the previous quarter, influenced by reduced volumes and increased operational costs, including freight and energy. Year-over-year, EBITDA rose by 21%, buoyed by robust pricing in packaging despite higher costs. OCC prices fell 6% from the previous quarter and were 23% lower year-over-year, while pulp prices showcased mixed trends, with softwood rising 4% and hardwood declining 2%. The packaging segment experienced a 3% drop in sales quarter-over-quarter, with a 17% decrease in EBITDA. Conversely, year-over-year sales rose by 7%, with a significant 45% increase in EBITDA due to higher selling prices. The tissue segment saw an 8% sales decline sequentially, with a corresponding 18% drop in EBITDA. Year-over-year, tissue sales were relatively stable, but EBITDA decreased by $13 million. Overall, Cascades remains cautious about economic uncertainties, affecting demand in both packaging and tissue segments.

Cascades Financial Statement Overview

Summary
Cascades demonstrates stable revenue growth and solid cash flow management, which are positive indicators of operational resilience. However, profitability struggles persist, as reflected in negative net income and low EBIT margins. The balance sheet shows moderate leverage, allowing some financial stability but with a need for improved profitability to enhance overall financial health. The company should focus on improving margins and reducing debt to strengthen its financial position.
Income Statement
62
Positive
The company shows a modest revenue growth of 0.96% in TTM (Trailing-Twelve-Months), reflecting resilience in sales. However, the net profit margin is negative, indicating ongoing profitability challenges. The EBIT margin is low at 2.87%, although EBITDA margin is relatively better at 9.14%, suggesting some operational efficiency. Overall, while there is stable revenue growth, profitability remains a concern.
Balance Sheet
58
Neutral
The debt-to-equity ratio stands at 1.31, indicating a moderate level of leverage. Return on Equity is negative due to the net loss, highlighting profitability issues. The equity ratio is 34.02%, suggesting a reasonable proportion of assets financed by shareholders. The balance sheet reflects a company with moderate leverage but with room to improve profitability.
Cash Flow
66
Positive
The operating cash flow to net income ratio is strong, showing robust cash generation relative to earnings. Free cash flow has decreased but remains positive, indicating some financial flexibility. Free cash flow to net income ratio is positive, suggesting efficient cash management. Cash flow performance is solid, with strong operating cash flow providing a buffer against profitability challenges.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
4.75B4.70B4.64B4.47B3.96B5.16B
Gross Profit
1.83B1.85B1.66B1.63B491.00M836.00M
EBIT
136.00M95.00M40.00M141.00M151.00M366.00M
EBITDA
434.00M392.00M307.00M273.00M281.00M548.00M
Net Income Common Stockholders
-4.00M-31.00M-76.00M-14.00M-47.00M198.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
389.00M28.00M54.00M111.00M175.00M389.00M
Total Assets
5.41B5.00B4.77B5.05B4.57B5.41B
Total Debt
2.06B2.12B1.94B2.07B1.52B2.06B
Net Debt
1.68B2.10B1.88B1.97B1.35B1.68B
Total Liabilities
3.46B3.23B2.99B3.13B2.64B3.46B
Stockholders Equity
1.75B1.72B1.74B1.87B1.88B1.75B
Cash FlowFree Cash Flow
79.00M88.00M159.00M-362.00M-90.00M324.00M
Operating Cash Flow
258.00M272.00M510.00M144.00M211.00M587.00M
Investing Cash Flow
-144.00M-150.00M-332.00M-486.00M-247.00M-203.00M
Financing Cash Flow
-114.00M-149.00M-225.00M272.00M-529.00M-156.00M

Cascades Technical Analysis

Technical Analysis Sentiment
Positive
Last Price9.00
Price Trends
50DMA
8.96
Positive
100DMA
10.24
Negative
200DMA
10.35
Negative
Market Momentum
MACD
-0.01
Negative
RSI
57.55
Neutral
STOCH
74.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CAS, the sentiment is Positive. The current price of 9 is above the 20-day moving average (MA) of 8.68, above the 50-day MA of 8.96, and below the 200-day MA of 10.35, indicating a neutral trend. The MACD of -0.01 indicates Negative momentum. The RSI at 57.55 is Neutral, neither overbought nor oversold. The STOCH value of 74.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CAS.

Cascades Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
C$13.79B16.7116.68%1.47%9.80%60.44%
TSWPK
78
Outperform
C$2.73B13.4611.26%0.40%5.50%9.93%
74
Outperform
C$1.81B11.299.65%4.16%-2.58%100.21%
TSSXP
68
Neutral
C$98.98M-10.60%4.47%-3.15%-222.64%
62
Neutral
$6.94B11.292.95%3.87%2.70%-24.49%
TSCAS
59
Neutral
$903.97M-0.24%5.25%2.88%80.95%
$10.10B16.5116.78%1.49%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:CAS
Cascades
9.07
-0.08
-0.90%
TSE:CCL.A
CCL Industries (A)
80.49
8.25
11.42%
TSE:SXP
Supremex
3.95
0.39
10.96%
TSE:TCL.A
Transcontinental
21.50
8.45
64.75%
TSE:WPK
Winpak
45.10
2.63
6.19%
CCDBF
CCL Industries
57.57
5.71
11.01%

Cascades Corporate Events

Private Placements and Financing
Cascades Inc. Announces $400 Million Senior Notes Offering
Positive
May 29, 2025

Cascades Inc. announced the pricing of a private placement of US$400 million in Senior Notes due 2030, with a 6.750% interest rate. The proceeds will be used to redeem existing notes, repay part of its revolving credit facility, and cover transaction costs, potentially strengthening its financial position and operational flexibility.

The most recent analyst rating on (TSE:CAS) stock is a Hold with a C$12.50 price target. To see the full list of analyst forecasts on Cascades stock, see the TSE:CAS Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Cascades Inc. Announces $400 Million Senior Notes Offering
Positive
May 28, 2025

Cascades Inc. announced a proposed private offering of US$400 million in Senior Notes due 2030, with the intention to use the proceeds to redeem existing notes, repay part of its revolving credit facility, and cover transaction expenses. This move is aimed at optimizing the company’s financial structure and could enhance its market position by reducing debt and improving liquidity.

The most recent analyst rating on (TSE:CAS) stock is a Hold with a C$12.50 price target. To see the full list of analyst forecasts on Cascades stock, see the TSE:CAS Stock Forecast page.

Executive/Board ChangesShareholder MeetingsRegulatory Filings and Compliance
Cascades Inc. Elects Directors at Annual Shareholders Meeting
Neutral
May 9, 2025

Cascades Inc. held its Annual General Meeting of Shareholders on May 8, 2025, where all eleven proposed directors were elected by a majority vote. This election reinforces the company’s leadership team as it continues to focus on eco-friendly products and sustainable practices. The final voting results will be filed with Canadian Securities Regulators, reflecting the company’s commitment to transparency and governance.

Business Operations and StrategyFinancial Disclosures
Cascades Inc. Sees Improved Q1 2025 Results Amid Economic Challenges
Positive
May 8, 2025

Cascades Inc. reported its financial results for the first quarter of 2025, showing a slight increase in sales compared to the previous year, despite facing challenges such as lower volumes and higher operational costs. The company experienced a significant improvement in operating income and net earnings per share, attributed to favorable selling prices and raw material costs, as well as the depreciation of the Canadian dollar. The outlook for the second quarter is optimistic, with expected improvements in packaging and tissue performance, although macro-economic uncertainties may impact future demand.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.