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Stella-Jones Inc (TSE:SJ)
TSX:SJ
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Stella-Jones
(TSX:SJ)
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Rating:78Outperform
Price Target:―
Stella-Jones scores a solid 78, reflecting its robust financial performance, particularly in cash flow generation and revenue growth. The technical indicators suggest a stable stock price with potential short-term fluctuations. The reasonable valuation and consistent dividend growth further support the stock's attractiveness. While there are minor challenges, such as a decline in utility pole volumes, the overall outlook remains positive due to the company's strong financial position and strategic initiatives.
Stella-Jones (SJ) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$4.40B
Dividend Yield1.51%
Average Volume (3M)94.50K
Price to Earnings (P/E)13.6
Beta (1Y)0.41
Revenue Growth-0.26%
EPS Growth-4.15%
CountryCA
Employees3,000
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)1.91
Shares Outstanding55,115,345
10 Day Avg. Volume84,684
30 Day Avg. Volume94,495
Financial Highlights & Ratios
PEG Ratio17.69
Price to Book (P/B)2.07
Price to Sales (P/S)1.16
P/FCF Ratio15.15
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue1.71
Enterprise Value/Gross Profit8.48
Enterprise Value/Ebitda9.16
Forecast
1Y Price Target
$90.03Price Target Upside12.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Stella-Jones Business Overview & Revenue Model
Company DescriptionStella-Jones Inc. is a leading North American manufacturer and distributor of industrial wood products. The company operates primarily in two sectors: utility poles and railway ties. Stella-Jones produces pressure-treated wood products, which are essential for infrastructure and construction projects across North America. Their core products include utility poles, railway ties, and other related wood products, serving industries such as telecommunications, electrical utilities, and railroads.
How the Company Makes MoneyStella-Jones generates revenue through the manufacturing and sale of pressure-treated wood products. The company's primary revenue streams are the sale of utility poles and railway ties. Utility poles are integral to the telecommunications and electrical utility sectors, providing a steady demand for replacements and new installations. Railway ties are critical components for railway maintenance and expansion, ensuring a consistent need within the transportation sector. Stella-Jones also benefits from long-term supply agreements with key customers and partners, which provide a stable and predictable revenue base. Additionally, the company may engage in strategic acquisitions to enhance its product offerings and expand its market reach.
Stella-Jones Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced outlook with strong EBITDA margins and successful acquisition integration against a backdrop of adjusted sales guidance and challenges in railway tie sales. While there are clear growth areas, some caution is noted due to macroeconomic conditions and specific operational challenges.Q2-2025 Updates
Positive Updates
Strong EBITDA Margin
Stella-Jones reported an EBITDA margin of 18.3% for Q2 2025 and 18.8% year-to-date, exceeding the 17% target, demonstrating resilience despite lower sales.
Successful Acquisition of Locweld
The acquisition of Locweld has been successfully integrated, providing a presence in the steel transmission structure market with a 5-year commitment from a major North American utility.
Improved Liquidity Position
The company ended Q2 with $700 million in available liquidity and a net debt-to-EBITDA ratio of 2.4x, indicating a strong balance sheet and financial flexibility.
Positive Residential Lumber Outlook
Sales for residential lumber were stable in Q2 2025, with expectations to achieve sales within the $600 million to $650 million target range for the year.
Utility Pole Volume Recovery
There is a steady trend of increasing utility pole volumes year-over-year, with expectations of low single-digit sales growth in the second half of 2025.
Negative Updates
Lower Overall Sales Guidance
Stella-Jones adjusted its revenue outlook for 2025, now expecting approximately $3.5 billion in sales, down from the previous $3.6 billion due to softer macroeconomic conditions.
Decline in Railway Tie Sales
Railway tie sales were down 11% organically in Q2 2025 due to a Class 1 customer treating more ties internally, with a forecasted low single-digit year-over-year decline for the remainder of the year.
Fire Incident at Alabama Facility
A fire at the Brierfield, Alabama utility pole treating facility impacted the oil treating facility, though minimal disruption to overall operations was reported.
Reduced Utility Pole Sales Outlook
Utility pole sales were down 4% organically, with the sales growth outlook reduced to the low single-digit range for the remainder of the year.
Company Guidance
During Stella-Jones' second quarter earnings call for 2025, the company provided an updated guidance amidst softer sales volumes and macroeconomic challenges. The company revised its full-year sales outlook to approximately $3.5 billion, down from the previous $3.6 billion estimate, primarily due to lower demand for utility poles and railway ties. Despite the sales decline, Stella-Jones maintained a strong EBITDA margin of 18.3% for the quarter and expects to sustain margins above 17% for the year. The company highlighted the successful integration of Locweld, which enhanced their presence in the steel transmission structure market, contributing positively to their utility pole segment. While utility pole sales experienced a 4% organic decline, the company projects low single-digit growth in this segment for the remainder of the year, driven by improved quoting activity and new customer agreements. Railway tie sales were down 11% organically, affected by a Class 1 customer treating more ties internally, but Stella-Jones aims to offset this with increased commercial sales. Residential lumber sales remained stable, with the company optimistic about achieving the $600 million to $650 million target range. Stella-Jones continues to focus on strategic growth through acquisitions, maintaining leverage within target levels, and returning over $500 million to shareholders by 2025.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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.45B | 3.47B | 3.32B | 3.06B | 2.75B | 2.55B |
| Gross Profit | 697.00M | 724.00M | 688.00M | 524.00M | 456.00M | 446.00M |
| EBITDA | 645.00M | 633.00M | 608.00M | 448.00M | 400.00M | 385.00M |
| Net Income | 331.00M | 319.00M | 326.00M | 241.00M | 227.00M | 210.00M |
Balance Sheet | ||||||
| Total Assets | 4.08B | 4.10B | 3.71B | 3.07B | 2.67B | 2.43B |
| Cash, Cash Equivalents and Short-Term Investments | 65.00M | 50.00M | 0.00 | -167.00M | -144.00M | -139.00M |
| Total Debt | 1.62B | 1.70B | 1.61B | 1.11B | 878.00M | 745.00M |
| Total Liabilities | 2.10B | 2.16B | 2.06B | 1.52B | 1.22B | 1.05B |
| Stockholders Equity | 1.98B | 1.94B | 1.65B | 1.56B | 1.45B | 1.37B |
Cash Flow | ||||||
| Free Cash Flow | 363.00M | 265.00M | -58.00M | 147.00M | 187.00M | 123.00M |
| Operating Cash Flow | 501.00M | 408.00M | 107.00M | 255.00M | 251.00M | 178.00M |
| Investing Cash Flow | -161.00M | -137.00M | -258.00M | -154.00M | -193.00M | -54.00M |
| Financing Cash Flow | -275.00M | -221.00M | 151.00M | -101.00M | -58.00M | -124.00M |
Stella-Jones Technical Analysis
Positive
80.12
Price Trends
78.77
Positive
78.45
Positive
73.60
Positive
Market Momentum
0.55
Positive
51.18
Neutral
20.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SJ, the sentiment is Positive. The current price of 80.12 is above the 20-day moving average (MA) of 79.86, above the 50-day MA of 78.77, and above the 200-day MA of 73.60, indicating a bullish trend. The MACD of 0.55 indicates Positive momentum. The RSI at 51.18 is Neutral, neither overbought nor oversold. The STOCH value of 20.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:SJ.
Stella-Jones Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.40B | 13.58 | 17.05% | 1.51% | -0.26% | -4.15% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
58 Neutral | C$289.43M | 20.05 | 4.24% | 8.82% | -26.79% | -57.05% | |
55 Neutral | $410.60M | ― | -11.53% | ― | -7.60% | 50.15% | |
52 Neutral | $1.41B | ― | -19.38% | ― | -1.38% | -64.10% | |
49 Neutral | $7.39B | 3,150.31 | -1.80% | 1.93% | -8.31% | -191.58% | |
46 Neutral | C$127.75M | ― | -3.84% | ― | 3.89% | 49.05% |
* Basic Materials Sector Average
TSE:SJ
Stella-Jones
80.12
-4.65
-5.49%
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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
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.