Saputo Inc. (SAP) AI Stock Analysis

Compare

390 Followers

Top Page

Saputo Inc.

(TSX:SAP)

Select Model

Outperform 70 (OpenAI - 5.2)

Rating:70Outperform

Price Target:

C$47.00

▲(9.25% Upside)

Action:UpgradedDate:02/08/26

The score is driven by improving operational performance and strong cash generation (supported by a positive earnings-call read-through and solid cash-flow metrics), alongside constructive technical momentum. These positives are moderated by mixed earnings consistency/top-line pressure in the financial statements and a less attractive valuation (higher P/E with only a modest dividend yield).

Positive Factors

Strong cash generation & improved leverage

Sustained operating cash flow (~$1.1B YTD) and reduced net leverage to ~1.8x provide durable financial flexibility. Strong cash conversion supports ongoing capex, selective M&A, and shareholder returns while insulating operations from short-term profit swings.

Margin expansion from operational execution

Material EBITDA growth and a ~1.7pp margin gain reflect lasting efficiency improvements and cost discipline. If sustained, higher operating margins improve free cash flow generation and create buffer against commodity-driven revenue pressure.

Network modernization & capacity upgrades

Targeted plant upgrades and network consolidation materially raise capacity and lower unit costs. These structural productivity gains should persist beyond cycles, supporting scale advantages in ingredients and branded segments and enabling higher margin capture.

Negative Factors

Top-line pressure and negative revenue trend

Persistent top-line declines driven by commodity price weakness suggest revenue is sensitive to product price cycles. Structural recovery in volumes or successful mix shift toward higher‑value products is required to restore consistent growth over the medium term.

Earnings volatility and weak ROE

Intermittent net losses and negative ROE indicate uneven profitability versus equity base. This weakens long-term shareholder returns and raises reliance on cash generation and balance-sheet management to fund growth and capital returns when operating income is volatile.

Commodity exposure and market volatility risk

High sensitivity to milk supply and commodity price swings creates recurring margin and inventory realization risk. Structural volatility can compress margins cyclically and complicate capacity planning and pricing pass-through over multiple quarters.

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

Market Cap

C$17.47B

Dividend Yield1.89%

Average Volume (3M)853.24K

Price to Earnings (P/E)19.2

Beta (1Y)0.49

Revenue Growth5.37%

EPS Growth-135.85%

CountryCA

Employees19,600

SectorConsumer Defensive

Sector Strength42

IndustryPackaged Foods

Share Statistics

EPS (TTM)0.57

Shares Outstanding405,344,240

10 Day Avg. Volume768,057

30 Day Avg. Volume853,235

Financial Highlights & Ratios

PEG Ratio0.36

Price to Book (P/B)1.51

Price to Sales (P/S)0.55

P/FCF Ratio15.44

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$47.75

Price Target Upside10.99% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering8

EPS Forecast (FY)1.97

Revenue Forecast (FY)C$19.13B

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 sale of dairy products, which include cheese, fluid milk, and dairy ingredients. The company operates through various segments, including the Dairy Products Division (Canada), the Dairy Products Division (USA), the Cheese Division (Canada and USA), and the International Sector. Key revenue streams come from retail sales, foodservice sales, and industrial sales. Significant partnerships with retailers and foodservice operators contribute to consistent demand for its products. Additionally, Saputo benefits from economies of scale due to its extensive production capabilities and distribution networks, enhancing its profitability. The company also engages in strategic acquisitions to expand its product offerings and market presence, further driving revenue growth.

Saputo Inc. Earnings Call Summary

Earnings Call Date:Feb 05, 2026

(Q3-2026)

% Change Since: |

Next Earnings Date:Jun 04, 2026

Earnings Call Sentiment Positive

The call emphasized strong operational execution, significant margin expansion, robust cash generation and meaningful sector-level improvements (Canada, U.S. ingredients, International and Europe). These positives outweigh the near-term revenue pressure from commodity price effects, continued market volatility due to abundant milk supply, and higher operating costs. Management conveyed confidence in continued investments, share repurchases and the ability to capture protein-driven demand while acknowledging ongoing short-term headwinds.

Q3-2026 Updates

Positive Updates

Adjusted EBITDA Growth and Margin Expansion

Adjusted EBITDA increased 18% ($75M) to $492M; adjusted margin expanded to 10.1% from 8.4% a year ago (+1.7 percentage points), reflecting cost discipline and operational efficiencies.

Strong Adjusted Net Earnings and EPS Improvement

Adjusted net earnings rose 41% to $235M and adjusted EPS increased 46% to $0.57, benefiting from stronger earnings and share repurchases.

Robust Cash Generation and Balance Sheet Strength

Net cash from operations was $401M for the quarter and $1.1B year-to-date; net debt-to-adjusted EBITDA improved to 1.76x (below the long-term target), supporting capital returns and investment flexibility.

Shareholder Returns

Returned $646M to shareholders year-to-date via dividends and repurchase of 12.6M shares under NCIB, demonstrating active capital allocation.

Canada Sector Outperformance

Canada revenue up 4% (5% year-to-date) with adjusted EBITDA up 8% to $189M; second consecutive quarter of record profitability driven by higher volumes, favorable mix (value-added milk, cheese, cultured products), pricing and automation efficiency.

U.S. Operational and Ingredient Capacity Gains

U.S. adjusted EBITDA rose 16% to $185M despite commodity headwinds; investments in ingredients (Waupun whey upgrades increasing WPC80 output ~35% and new lactose dryer) and network consolidation (Green Bay to Franklin) boosted capacity and cost competitiveness.

International and Europe Margin Recovery

International adjusted EBITDA up 61% to $82M on higher volumes and favorable price-to-milk-cost relationship; Europe revenue up 8% to $336M and adjusted EBITDA up 16% to $36M with margin at 11%, aided by branded portfolio investments and operational consolidation (Nuneaton).

Category Wins and Commercial Momentum

Strong commercial execution highlighted by new partnerships (value-added milk), exceptional holiday cream execution (heavy cream +7% growth), mozzarella growth, cottage cheese share gains and branded wins (Cathedral City household penetration).

Network Modernization Delivering Efficiencies

Capital investments and automation are translating into improved fill rates, ~30% output boost at Franklin, earlier efficiencies from a consolidated Midwest warehouse and lower unit costs from production automation.

CapEx and Growth Investment Capacity

Management signals capacity to invest in growth (organic and M&A) with FY27 capex expected to be north of $400M, leveraging strong cash flow and lower net leverage.

Negative Updates

Overall Revenue Decline

Consolidated revenue declined 2% to $4.9B year-over-year, primarily driven by lower commodity-related selling prices in key markets.

U.S. Revenue Pressure from Commodity Prices

U.S. revenue fell 7% to $2.1B due mainly to lower U.S. dairy commodity prices (butter and cheese block), with negative inventory realization in cheese during the quarter acting as a headwind.

Market Volatility and Milk Supply Dynamics

Management expects continued volatility in U.S. dairy markets driven by abundant milk supply growth (global milk supply up ~5% cited), which has pressured margins even as demand begins to recover.

Rising Operating Costs

Higher labor and compensation costs plus increased A&P spending and promotional investments pressure SG&A, partially offset by SG&A optimization but still a headwind to near-term margins.

Regional Weaknesses and Volume Mix Risks

International revenue down 3% and Australia faced lower export volumes (partially offset by stronger domestic sales); some softer retail volume in Europe outside cheese categories.

Inventory and Commodity Timing Effects

Negative inventory realization in cheese in the U.S. quarter created temporary headwinds to reported results, exposing timing sensitivity to commodity price movements.

Exposure to Trade and Macro Uncertainty

Potential trade developments (e.g., EU–Mercosur) and dynamic macro conditions in Argentina introduce execution and regulatory risks; sanitary/standards issues could limit trade benefits.

CapEx Acceleration Implications

While capex will rise (FY27 >$400M), increased investment intensity could pressure free cash flow relative to the current low-capex FY26 base if not carefully phased.

Company Guidance

Management guided that U.S. dairy market volatility is likely to persist through the remainder of the fiscal year and into FY27, but reiterated confidence in long‑term protein demand and the company’s ability to invest and grow: Q3 adjusted EBITDA was $492M (up 18% or $75M) on $4.9B revenue (−2%), net earnings $220M, adjusted net earnings $235M (up 41%) and adjusted EPS $0.57 (up 46%); Q3 net cash from operations was $401M (YTD $1.1B), net debt/adjusted EBITDA improved to 1.76x, and the company returned $646M YTD to shareholders (including NCIB repurchase of 12.6M shares). Management signaled continued capital allocation to organic growth, ingredients and selective M&A—CapEx for FY27 is expected north of $400M—and highlighted major project metrics (≈$180M Waupun upgrade with ~35% higher WPC80 output; Franklin consolidation boosting output ~30%; Green Bay closure), plus segment results (Canada revenue +4% with Adj. EBITDA $189M, +8%; U.S. revenue $2.1B, −7%, Adj. EBITDA $185M, +16%; International revenue $994M, −3%, Adj. EBITDA $82M, +61%; Europe revenue $336M, +8%, Adj. EBITDA $36M, 11% margin) and a target posture toward high‑single to double‑digit U.S. EBITDA margins as efficiencies are fully realized.

Saputo Inc. Financial Statement Overview

Summary

Cash flow is a relative strength (strong TTM operating cash flow and free cash flow), and leverage appears manageable. However, earnings quality and consistency are mixed: recent margin volatility, a FY2025 net loss, negative TTM revenue growth, and weak/negative ROE temper the overall financial profile.

Income Statement

Neutral

TTM (Trailing-Twelve-Months) results show modest profitability (about 3.4% net margin) with mid-single-digit operating profitability, and net income has rebounded versus the FY2025 annual loss. However, revenue growth is negative in the TTM period and margins have been volatile over the last few years (notably weaker gross margin in FY2025 vs FY2021), indicating uneven pricing/cost dynamics and less consistent earnings power than top-tier peers.

Balance Sheet

Positive

Leverage appears manageable for the sector with debt-to-equity around 0.6 in TTM (Trailing-Twelve-Months), and equity remains sizable relative to the asset base. The key weakness is profitability for shareholders: return on equity is negative in the latest periods (TTM and FY2025), which suggests recent earnings pressure is weighing on balance-sheet quality despite acceptable leverage.

Cash Flow

Positive

Cash generation is a relative strength: TTM (Trailing-Twelve-Months) operating cash flow is solid (~$1.45B) and free cash flow is strong (~$1.08B) with sharp improvement versus prior years. That said, cash conversion metrics provided are not consistently high (coverage ratios are modest in the data), and free cash flow is below net income in the TTM period, implying some working-capital or cash cost headwinds even as absolute free cash flow has improved.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	18.99B	19.06B	17.34B	17.84B	15.04B	14.29B
Gross Profit	2.37B	1.56B	1.51B	1.55B	1.16B	1.47B
EBITDA	1.61B	1.43B	1.37B	1.42B	1.02B	1.37B
Net Income	644.00M	-176.00M	265.00M	622.00M	274.00M	626.00M
Balance Sheet
Total Assets	13.32B	13.91B	14.26B	14.43B	13.68B	13.12B
Cash, Cash Equivalents and Short-Term Investments	447.00M	257.00M	466.00M	263.00M	165.00M	308.70M
Total Debt	3.95B	3.59B	3.99B	4.04B	4.25B	4.11B
Total Liabilities	6.64B	6.94B	7.21B	7.29B	7.18B	6.68B
Stockholders Equity	6.68B	6.98B	7.05B	7.14B	6.50B	6.44B
Cash Flow
Free Cash Flow	1.08B	681.00M	537.00M	384.00M	195.00M	645.10M
Operating Cash Flow	1.45B	1.10B	1.19B	1.02B	693.00M	1.08B
Investing Cash Flow	-318.00M	-285.00M	-652.00M	-632.00M	-799.00M	-387.40M
Financing Cash Flow	-1.01B	-1.03B	-343.00M	-369.00M	-72.00M	-704.70M

Saputo Inc. Technical Analysis

Technical Analysis Sentiment

Positive

Last Price43.02

Price Trends

50DMA

41.55

Positive

100DMA

39.12

Positive

200DMA

34.38

Positive

Market Momentum

MACD

0.42

Negative

RSI

58.19

Neutral

STOCH

67.88

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 43.02 is above the 20-day moving average (MA) of 42.40, above the 50-day MA of 41.55, and above the 200-day MA of 34.38, indicating a bullish trend. The MACD of 0.42 indicates Negative momentum. The RSI at 58.19 is Neutral, neither overbought nor oversold. The STOCH value of 67.88 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SAP	70 Outperform	C$17.47B	19.22	-1.32%	1.89%	5.37%	-135.85%
PBH	69 Neutral	C$5.26B	-573.63	3.86%	3.34%	13.05%	-33.72%
MFI	64 Neutral	C$3.36B	23.11	11.72%	4.95%	-0.03%	497.79%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
HLF	61 Neutral	C$465.22M	8.64	8.60%	4.83%	6.15%	-36.76%

* Consumer Defensive Sector Average

Performance Comparison

TSE:SAP

Saputo Inc.

42.78

17.97

72.42%

TSE:HLF

High Liner Foods

16.41

1.12

7.35%

TSE:MFI

Maple Leaf Foods

28.31

7.15

33.77%

TSE:PBH

Premium Brands

101.01

24.02

31.20%

Saputo Inc. Corporate Events

Business Operations and StrategyFinancial Disclosures

Saputo Delivers Double-Digit EBITDA Growth Despite Softer Revenues in Q3 2026

Positive

Feb 5, 2026

Saputo reported third-quarter fiscal 2026 revenues of $4.89 billion, down 2.1% year over year due to lower U.S. dairy commodity prices, but delivered an 18% increase in adjusted EBITDA to $492 million, lifting its margin to 10.1% from 8.4%. The performance was driven by higher sales volumes across all sectors, a more profitable product mix anchored in cheese and value-added categories, operational efficiencies from recent capital investments, and firm cost control, including SG&A optimization, which more than offset unfavourable commodity conditions and higher marketing spend. Net earnings swung to a profit of $220 million, largely reflecting the absence of last year’s UK goodwill impairment as well as stronger operating results, while robust cash generation and unchanged capital expenditures underscored the company’s improved resilience and strategic progress heading into the final quarter of the fiscal year.

The most recent analyst rating on (TSE:SAP) stock is a Buy with a C$44.00 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: Feb 08, 2026