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Stella-Jones (TSE:SJ)
:SJ
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Stella-Jones
(OTC:SJ)
76Outperform
Stella-Jones (SJ) vs. S&P 500 (SPY)
Market Cap
C$3.76B
Dividend Yield1.79%
Average Volume (3M)151.57K
Price to Earnings (P/E)11.8
Beta (1Y)0.53
Revenue Growth4.52%
EPS Growth0.51%
CountryCA
Employees2,893
SectorBasic Materials
Sector Strength63
IndustryForestry
Share Statistics
EPS (TTM)5.65
Shares Outstanding55,686,790
10 Day Avg. Volume189,433
30 Day Avg. Volume151,570
Financial Highlights & Ratios
PEG Ratio23.27
Price to Book (P/B)N/A
Price to Sales (P/S)1.08
Price to Cash Flow (P/CF)8.80
P/FCF Ratio11.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$80.60Price Target Upside19.33% Upside
Rating ConsensusHold
Number of Analyst Covering5
Stella-Jones Business Overview & Revenue Model
Company DescriptionStella-Jones Inc. is a leading North American manufacturer and marketer of pressure-treated wood products. The company operates primarily in two sectors: the residential and industrial markets. Its core products include railway ties, utility poles, residential lumber, and industrial wood products. Stella-Jones serves a wide range of customers, including railroads, electrical utilities, and the construction industry, providing essential materials for infrastructure development and maintenance.
How the Company Makes MoneyStella-Jones generates revenue through the sale of pressure-treated wood products, with its primary revenue streams being railway ties and utility poles. The company secures long-term contracts with major railroads and utility companies, ensuring a consistent demand for its products. Additionally, Stella-Jones benefits from strategic acquisitions that expand its market presence and enhance its production capabilities. The company also leverages its extensive distribution network to efficiently supply wood products to residential and industrial customers, contributing to its overall earnings.
Stella-Jones Financial Statement Overview
Summary
Stella-Jones exhibits strong financial health characterized by consistent revenue growth, solid profitability margins, and effective cash management. The company maintains a balanced approach to leverage and equity, enhancing its financial stability. Overall, Stella-Jones is in a strong financial position with positive growth trends and efficient operations.Income Statement
Stella-Jones has demonstrated strong revenue growth with a 4.52% increase from 2023 to 2024. The company also maintains healthy profitability margins with a gross profit margin of 20.86% and a net profit margin of 9.19% in 2024. EBIT and EBITDA margins are strong at 14.50% and 18.24%, respectively, indicating efficient operational management.85
Very Positive
Balance Sheet
The balance sheet reflects a stable capital structure with a debt-to-equity ratio of 0.88, indicating moderate leverage. The return on equity is solid at 16.44%, showcasing effective use of equity funds. The equity ratio of 47.31% suggests a well-balanced financing mix between debt and equity.78
Positive
Cash Flow
Stella-Jones reported significant improvement in free cash flow, growing from negative in 2023 to a positive $265 million in 2024. The operating cash flow to net income ratio of 1.28 indicates robust cash generation relative to net income, and the free cash flow to net income ratio of 0.83 reflects efficient capital expenditures.92
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.47B | 3.32B | 3.06B | 2.75B | 2.55B | Gross Profit |
| 724.00M | 688.00M | 524.00M | 456.00M | 446.00M | EBIT |
| 503.00M | 499.00M | 359.00M | 326.00M | 309.00M | EBITDA |
| 633.00M | 608.00M | 448.00M | 400.00M | 385.00M | Net Income Common Stockholders |
| 319.00M | 326.00M | 241.00M | 227.00M | 210.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 50.00M | 0.00 | -167.00M | -144.00M | -139.00M | Total Assets |
| 4.10B | 3.71B | 3.07B | 2.67B | 2.43B | Total Debt |
| 1.70B | 1.61B | 1.11B | 878.00M | 745.00M | Net Debt |
| 1.65B | 1.61B | 1.27B | 1.02B | 884.00M | Total Liabilities |
| 2.16B | 2.06B | 1.52B | 1.22B | 1.05B | Stockholders Equity |
| 1.94B | 1.65B | 1.56B | 1.45B | 1.37B |
| Cash Flow | Free Cash Flow | |||
| 265.00M | -58.00M | 147.00M | 187.00M | 123.00M | Operating Cash Flow |
| 408.00M | 107.00M | 255.00M | 251.00M | 178.00M | Investing Cash Flow |
| -137.00M | -258.00M | -154.00M | -193.00M | -54.00M | Financing Cash Flow |
| -221.00M | 151.00M | -101.00M | -58.00M | -124.00M |
Stella-Jones Technical Analysis
Negative
67.54
Price Trends
69.90
Negative
72.21
Negative
80.77
Negative
Market Momentum
-0.77
Positive
44.98
Neutral
30.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SJ, the sentiment is Negative. The current price of 67.54 is below the 20-day moving average (MA) of 68.96, below the 50-day MA of 69.90, and below the 200-day MA of 80.77, indicating a bearish trend. The MACD of -0.77 indicates Positive momentum. The RSI at 44.98 is Neutral, neither overbought nor oversold. The STOCH value of 30.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SJ.
Stella-Jones Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$3.76B | 11.79 | 17.93% | 1.79% | 4.52% | 0.51% | |
67 Neutral | C$306.90M | 13.92 | 6.61% | 6.67% | 24.29% | -27.59% | |
50 Neutral | $786.21M | ― | -18.73% | ― | -8.81% | -13.99% | |
48 Neutral | C$1.80B | ― | -18.83% | ― | -3.20% | -107.88% | |
47 Neutral | $2.64B | -3.98 | -26.97% | 3.35% | 2.55% | -29.66% | |
43 Neutral | C$12.56M | ― | -21.37% | ― | 0.29% | 9.05% |
* Basic Materials Sector Average
Performance Comparison
TSE:SJ
Stella-Jones
67.54
-5.55
-7.60%
TSE:IFP
Interfor
14.91
-5.21
-25.89%
TSE:CFP
Canfor
15.21
-1.04
-6.40%
TSE:CFF
Conifex Timber
0.32
-0.28
-46.67%
TSE:ADN
Acadian Timber
17.43
1.79
11.45%
Stella-Jones Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -3.02% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
Stella-Jones demonstrated robust growth with consistent sales and EBITDA increases, strong performance in key segments, and significant capital return to shareholders. However, there were challenges with a decline in utility pole volumes and a softer Q4 EBITDA. Despite these challenges, the company's strategic initiatives and financial flexibility position it well for future growth.Highlights
Consistent Sales and EBITDA Growth
Stella-Jones achieved a 5% increase in sales to $3.5 billion and a 4% growth in EBITDA to $633 million for the year 2024, maintaining an EBITDA margin of over 18%.
Strong Performance in Railway Ties and Residential Lumber
Railway ties sales grew by 15% in Q4 and achieved a mid-single-digit sales growth for the third consecutive year. Residential lumber sales increased by 12% organically in Q4, staying within the $600 million to $650 million target range.
Dividend Increase and Strong Capital Return
The company increased its dividend payout by 22% to $1.12 per share in 2024 and announced an 11% increase in the quarterly dividend to $0.31 per share, marking the 21st consecutive annual increase.
Successful Bond Offering
Stella-Jones completed an inaugural bond offering of $400 million for seven years, enhancing financial flexibility.
Commitment to Sustainability
Made significant strides in reducing greenhouse gas emissions, finalizing solar panel installations expected to cover 48% of a facility's electrical consumption.
Lowlights
Utility Poles Volume Decline
Utility pole volumes were down 4% in Q4 2024 compared to the same period last year, impacted by lower volumes for non-contract business.
Softness in Q4 EBITDA
Q4 EBITDA decreased by 4% to $150 million, affected by an unfavorable sales mix and non-recurring expenses.
Higher Net Debt to EBITDA Ratio
The leverage ratio increased to 2.6 times, slightly above the target range, due to the appreciation of the U.S. dollar.
Company Guidance
In Stella-Jones' fourth quarter earnings call for 2024, the company reported a 5% increase in annual sales to $3.5 billion, driven by a 6% organic growth in both utility poles and railway ties. EBITDA rose to $633 million, maintaining a margin of over 18%. For the fourth quarter, sales increased by 6% to $730 million, with utility poles generating $385 million in sales despite a 4% volume decline. Railway ties sales grew by 15% to $193 million, reflecting strong Class 1 demand. Residential lumber sales rose 12% to $93 million, ending the year within the $600 million to $650 million target range. The company maintained a disciplined capital allocation strategy, increasing its dividend by 22% to $1.12 per share, and initiating a normal course issuer bid. Stella-Jones reported $408 million in cash from operations and $275 million in free cash flow for the year. Looking forward, the company anticipates mid-single-digit growth in utility poles and low-single-digit growth for railway ties in 2025, while maintaining an EBITDA margin of at least 17%.Stella-Jones Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Stella-Jones Reports Strong 2024 Financial Results and Increases Dividend
Positive
Feb 27, 2025
Stella-Jones Inc. reported a 5% increase in annual sales to $3,469 million and an EBITDA margin of 18.2% for the year ending December 31, 2024. Despite softer market demand for utility poles, the company maintained strong operating cash flows and increased its quarterly dividend by 11%, reaffirming its financial objectives for 2023-2025. Looking forward to 2025, Stella-Jones aims to capitalize on the need to strengthen North America’s electrical grid and expand its offerings to infrastructure customers, focusing on optimizing its operating model and maintaining a healthy EBITDA margin to enhance shareholder value.
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.