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Saputo Inc. (TSE:SAP)
:SAP

Saputo Inc. (SAP) AI Stock Analysis

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Saputo Inc.

(TSX:SAP)

Rating:70Outperform
Price Target:
C$30.00
▲(7.64%Upside)
Saputo Inc.'s overall stock score is primarily supported by strong earnings call performance and positive technical indicators. While the stock benefits from revenue growth and strategic initiatives, valuation concerns due to negative earnings and profitability challenges weigh on the score. The company's stable balance sheet and strategic investments provide a foundation for future growth, despite external challenges.
Positive Factors
Commodity Trends
The near-term set-up appears positive with improving conditions in Argentina and better U.S. commodity trends.
Market Positioning
Given sustained category demand, strong free cash flow, and margin expansion opportunities, Saputo remains a more defensive name relative to many peers.
Profit Margins
USA profit margin came in ahead with network investments bearing fruit.
Negative Factors
Financial Expectations
Saputo fell short of expectations, with soft foodservice traffic impacting the USA, Argentina FX dynamics hurting international profit, and a slower margin recovery in Europe.
Margin Recovery
Lingering uncertainty on quarterly cadence of Europe margin recovery.
Market Volatility
The business is fairly impacted by commodity and macro variables across geographies, leading to variability in performance.

Saputo Inc. (SAP) vs. iShares MSCI Canada ETF (EWC)

Saputo Inc. Business Overview & Revenue Model

Company DescriptionSaputo Inc. produces, markets, and distributes dairy products in Canada, the United States, Argentina, Australia, and the United Kingdom. The company offers cheeses, including mozzarella and cheddar; specialty cheeses, such as ricotta, provolone, blue, parmesan, goat cheese, feta, romano, and havarti; fine cheeses comprising brie and camembert; and other cheeses that include brick, colby, farmer, munster, monterey jack, fresh curd, and processed cheeses. It also provides fluid milk, yogurt, sour cream, cottage cheese, and ice cream mixes, as well as other dairy and non-dairy products, which comprise butter, cream and creamers, aerosol whipped toppings, whipping cream, dips, spread, oil, flavored coffee whitener, and iced coffee. In addition, the company offers dairy ingredients and nutritional products, including milk powder, casein, whey powder, lactose, lactoferrin, infant formula, and whey protein concentrates; and distributes fine imported cheese to specialty stores, as well as dairy and non-dairy products manufactured by third parties. It serves customers in the retail, foodservice, and industrial segments. The company sells its products under the Saputo, Alexis de Portneuf, Armstrong, Bari, Cogruet, DuVillage 1860, Kingsey, Shepherd Gourmet Dairy, Stella, Woolwich Goat Dairy, Cathedral City, Clover, Country Life, Davidstow, Frylight, Wensleydale Creamery, Vitalite, Sheese, Dairyland, Neilson, Nutrilait, Baxter, Scotsburn, Trutaste, Milk2Go/Lait's Go, Joyya, Baileys, Heluva Good, CHEER, Cracker Barrel, Devondale, Fred Walker, Great Ocean Road, King Island Dairy, Liddells, Mersey Valley, Mil Lel, Murray Goulburn Ingredients, Warrnambool, South Cape, Sungold, Tasmanian Heritage, La Paulina, Molfino, Ricrem, Black Creek, Frigo Cheese Heads, Gardenia, Great Midwest, King's Choice, Lugano, Montchevre, Organic Creamery, Salemville, Treasure Cave, DairyStar, and Friendship Dairies brands. Saputo Inc. was founded in 1954 and is headquartered in Montreal, Canada.
How the Company Makes MoneySaputo Inc. generates revenue primarily through the production and sale of a wide range of dairy products, including cheese, fluid milk, and dairy ingredients. The company operates across multiple segments, including the USA, Canada, International, and Europe, each contributing to its financial performance based on regional market demands and conditions. Key revenue streams include sales to retail markets, foodservice operations, and industrial clients. Saputo capitalizes on its extensive distribution network and brand recognition to maintain a competitive edge. Additionally, strategic acquisitions and partnerships enhance its market presence and contribute to revenue growth by expanding product offerings and geographic reach.

Saputo Inc. Earnings Call Summary

Earnings Call Date:Jun 05, 2025
(Q4-2025)
|
% Change Since: 5.89%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call revealed a strong financial performance with significant revenue growth and successful cost-saving initiatives, particularly in North America. However, challenges in the international sector, particularly in Argentina, and softening consumer demand in food service channels tempered the overall positive outlook.
Q4-2025 Updates
Positive Updates
Strong Revenue and Growth in Key Sectors
Consolidated revenues reached $4.8 billion, a 5% increase compared to last year. Canada, U.S.A., and Europe sectors all generated year-over-year growth, with Canada seeing a 6% revenue increase and U.S.A. an 11% increase.
Successful Capital Investments and Cost Savings
Achieved approximately $27 million in cost savings in the U.S.A. sector during the quarter, reaching a $100 million milestone for the year. This success is attributed to infrastructure investments and system enhancements.
Share Buyback Program
Approximately $150 million in shares were repurchased under the NCIB program in fiscal year '25, demonstrating strong cash flow and financial stability.
Operational Efficiency and Margin Expansion
Improved operational efficiencies led to a 14% increase in adjusted EBITDA in Canada and nearly 100 basis point increase in margins. The SG&A optimization program also positively impacted fiscal 2026 outlook.
Negative Updates
Challenges in the International Sector
International performance was affected by the negative impact in Argentina from currency devaluation and hyperinflation, leading to a $225 million noncash negative impact on revenue.
Softening Consumer Demand
Notable softening in consumer demand, particularly in the food service channel, although recent signs of recovery have been observed.
Higher Depreciation and Financial Charges
Net earnings for the fourth quarter were down by $28 million compared to the same quarter last year, primarily due to higher depreciation and amortization expenses and increased financial charges related to the Argentina credit line.
Company Guidance
During Saputo Inc.'s fourth-quarter fiscal 2025 earnings call, the company provided detailed guidance on its financial performance and strategic initiatives. Key metrics included an adjusted EBITDA of $365 million on revenue of nearly $4.8 billion for the fourth quarter. The Canada, U.S.A., and Europe sectors experienced year-over-year growth, with notable improvement in Australia, although international performance was impacted by Argentina's currency devaluation and hyperinflation. Saputo accelerated share buybacks, repurchasing approximately $150 million in shares under its NCIB program in fiscal 2025. The company also highlighted cost savings of approximately $27 million in the U.S.A. sector during the quarter, contributing to a total of $100 million for the year. Strategic initiatives focused on operational efficiency, capital investments, and cost control were emphasized, with a commitment to enhancing adjusted EBITDA margins. Looking forward to fiscal 2026, the company plans to leverage digital technologies for operational efficiencies and maintain strong cash flow and balance sheet health to drive sustainable growth.

Saputo Inc. Financial Statement Overview

Summary
Saputo Inc. demonstrates solid revenue growth but struggles with profitability and cash generation, as reflected in the negative net income. The balance sheet is stable with moderate leverage, but the company's financial flexibility is constrained by its net debt. While free cash flow improved, ongoing operational inefficiencies and profitability issues pose significant challenges for future growth and financial health.
Income Statement
65
Positive
Saputo Inc. showed a mixed performance in the recent year. Revenue increased to $19.06 billion from $17.34 billion, marking a growth rate of 9.92%. However, the company recorded a net loss of $176 million, indicating significant profitability challenges. Gross profit margin improved to 29.88%, but net profit margin turned negative. The EBITDA margin fell to 3.83%, reflecting operational inefficiencies. Despite revenue growth, profitability remains a concern.
Balance Sheet
72
Positive
Saputo's balance sheet remains relatively strong with a debt-to-equity ratio of 0.52, indicating moderate leverage. Stockholders' equity has increased to $6.98 billion, contributing to an equity ratio of 50.16%, showcasing financial stability. However, the company's net debt position and negative net income raise concerns about future financial flexibility.
Cash Flow
68
Positive
Operating cash flow decreased slightly to $1.10 billion, but free cash flow improved to $681 million, reflecting better capital expenditure management. The operating cash flow to net income ratio is not meaningful due to negative net income. Free cash flow to net income ratio indicates cash generation challenges. Overall, the company exhibits adequate cash flow management, though profitability pressures remain.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue19.06B17.34B17.84B15.04B14.29B
Gross Profit5.70B2.52B5.42B4.68B4.72B
EBITDA730.00M1.18B1.51B1.08B1.48B
Net Income-176.00M265.00M622.00M274.00M626.00M
Balance Sheet
Total Assets13.91B14.26B14.43B13.68B13.12B
Cash, Cash Equivalents and Short-Term Investments257.00M466.00M263.00M165.00M308.70M
Total Debt3.59B3.99B4.04B4.25B4.11B
Total Liabilities6.94B7.21B7.29B7.18B6.68B
Stockholders Equity6.98B7.05B7.14B6.50B6.44B
Cash Flow
Free Cash Flow681.00M537.00M384.00M195.00M645.10M
Operating Cash Flow1.10B1.19B1.02B693.00M1.08B
Investing Cash Flow-285.00M-652.00M-632.00M-799.00M-387.40M
Financing Cash Flow-1.03B-343.00M-369.00M-72.00M-705.00M

Saputo Inc. Technical Analysis

Technical Analysis Sentiment
Positive
Last Price27.87
Price Trends
50DMA
26.49
Positive
100DMA
25.81
Positive
200DMA
25.66
Positive
Market Momentum
MACD
0.34
Negative
RSI
61.44
Neutral
STOCH
66.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SAP, the sentiment is Positive. The current price of 27.87 is above the 20-day moving average (MA) of 27.08, above the 50-day MA of 26.49, and above the 200-day MA of 25.66, indicating a bullish trend. The MACD of 0.34 indicates Negative momentum. The RSI at 61.44 is Neutral, neither overbought nor oversold. The STOCH value of 66.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:SAP.

Saputo Inc. Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSHLF
73
Outperform
C$535.91M7.0014.49%3.69%-4.45%90.27%
TSPBH
72
Outperform
C$3.76B31.616.75%4.06%6.29%24.34%
TSMFI
72
Outperform
C$3.60B37.956.05%3.31%3.16%
TSSAP
70
Outperform
C$11.40B42.30-2.51%2.76%9.91%-165.83%
65
Neutral
$27.02B15.16-4.24%3.17%1.01%1.94%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:SAP
Saputo Inc.
27.87
-2.85
-9.28%
TSE:HLF
High Liner Foods
18.47
5.57
43.18%
TSE:MFI
Maple Leaf Foods
29.61
6.01
25.47%
TSE:PBH
Premium Brands
83.70
-5.92
-6.61%

Saputo Inc. Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Saputo Inc. Reports Stable Fiscal 2025 Results Amidst Challenges
Positive
Jun 5, 2025

Saputo Inc. reported its fiscal 2025 results, highlighting stable performance amidst challenging conditions. The company achieved year-over-year growth in adjusted EBITDA and revenues in Canada, USA, and Europe, despite facing issues like the unfavorable milk-cheese spread in the USA and currency devaluation in Argentina. Saputo’s strategic investments in focus brands and infrastructure are expected to support future growth, while restructuring efforts and share buybacks reflect ongoing optimization and shareholder value enhancement.

The most recent analyst rating on (TSE:SAP) stock is a Buy with a C$37.00 price target. To see the full list of analyst forecasts on Saputo Inc. stock, see the TSE:SAP Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 08, 2025