Stella-Jones (SJ) AI Stock Analysis

• Market Cap: C$5.20B
• Dividend Yield: 1.43%
• Average Volume (3M): 95.11K
• Price to Earnings (P/E): 14.0
• Beta (1Y): 0.50
• Revenue Growth: 1.98%
• EPS Growth: 7.05%
• Country: CA
• Employees: 3,000
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Paper, Lumber & Forest Products
• EPS (TTM): 0.91
• Shares Outstanding: 54,643,394
• 10 Day Avg. Volume: 96,619
• 30 Day Avg. Volume: 95,114
• PEG Ratio: 1.84
• Price to Book (P/B): 2.31
• Price to Sales (P/S): 1.35
• P/FCF Ratio: 10.37
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$98.66
• Price Target Upside: 3.64% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 6.16
• Revenue Forecast (FY): C$3.71B

• Rating: 69 Neutral
• Price Target: C$103.00 ▲(8.19% Upside)
• Action: Downgraded Date: 03/01/26
• Date: Action: Downgraded 03/01/26

The score is driven primarily by solid profitability and improved recent cash generation, tempered by rising leverage and a 2025 revenue decline. Technicals are mixed with softer near-term momentum despite an intact longer-term uptrend, while valuation is reasonable and the latest earnings commentary remains constructive despite pricing/volume headwinds.

Positive Factors

Strong cash generation

Sustained operating cash flow (~$513M TTM) and robust free cash flow (~$391M) indicate durable cash conversion and internal funding capacity. This supports capex, M&A (e.g., Brooks), buybacks and dividends without heavy reliance on external financing, enhancing long-term financial flexibility.

Improving leverage

A clear downward trend in leverage (debt-to-equity ~0.74) and rising equity strengthens balance-sheet resilience for an asset-heavy business. Improved leverage reduces refinancing risk and increases capacity for strategic investments while preserving access to capital during industry cycles.

Scale and diversified end markets

Material scale across rail, utility and residential segments provides recurring replacement-driven demand and cross-segment diversification. Historical revenue expansion and multi-product exposure support resilient baseline sales and create synergies for distribution, pricing and acquisition-led growth.

Negative Factors

Modest recent revenue growth

Near-term organic growth has stalled, leaving the business more reliant on acquisitions or cyclical volumes to expand sales. Flat revenue constrains operating-leverage benefits and means margins and cash returns depend heavily on cost control and deal execution for sustainable long-term growth.

Spot pricing pressure in utility poles

Utility poles are a core revenue driver; persistent spot-price weakness erodes margins and could reduce segment cash generation. If spot demand remains weak, the company must offset with higher volumes, cost cuts, or price recovery, otherwise segment profitability may remain depressed.

Customer concentration / railway tie volume hit

Loss of volumes from a large rail customer highlights concentration and contract risk in the ties business. Internalization by a major buyer reduces revenue visibility, forces redeployment of capacity or pricing concessions, and increases the importance of replacing volumes via new contracts or acquisitions.

Stella-Jones Business Overview & Revenue Model

Company Description

Stella-Jones Inc. produces and markets pressure-treated wood products in Canada and the United States. It offers railway ties and timbers for railroad operators; and wood utility poles for electrical utilities and telecommunication companies. The company also provides residential lumber and accessories to retailers for outdoor applications; industrial products, including bridge and crossing timbers, foundation and marine piling, construction timbers, crane mats, fence posts, and highway guardrail posts; and coal tar-based products. In addition, company manufactures wood preservative and creosote. Stella-Jones Inc. was incorporation in 1992 and is headquartered in Saint-Laurent, Canada.

How the Company Makes Money

Stella-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 Financial Statement Overview

Summary

Strong profitability for the industry and a sharp rebound in operating/free cash flow in 2024–2025 support the score. Offsetting factors include the 2025 revenue decline and a material rise in leverage (debt-to-equity around 0.92), which reduces flexibility if demand/pricing stays soft.

Income Statement

Revenue expanded steadily from 2020–2024, but fell in 2025 (down 8.6%), signaling a near-term demand/price headwind. Profitability remains solid for the industry: 2025 operating profit margin was ~14.1% and net margin ~9.7%, with margins generally improving versus 2020–2022. Offsetting this, gross margin drifted down in 2025 versus 2024, suggesting some cost pressure or mix shift.

Balance Sheet

The company generates healthy shareholder returns (mid-teens return on equity across most years), but leverage has trended higher. Total debt increased materially from 2020 to 2025, and debt relative to equity is now around 0.92 (up from ~0.54 in 2020), reducing flexibility if earnings soften. Asset base has grown, but the rising debt load is the key balance-sheet risk.

Cash Flow

Cash generation improved sharply in 2024–2025, with 2025 operating cash flow of $557M and free cash flow of $454M, supporting reinvestment and capital returns. However, cash flow has been volatile: 2023 saw very weak operating cash flow ($107M) and negative free cash flow, indicating working-capital or spend swings can be significant. Recent free cash flow relative to net income is decent (about 82% in 2025) and the cash flow profile looks better than it did in 2023.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.49B	3.47B	3.32B	3.06B	2.75B
Gross Profit	689.00M	724.00M	688.00M	524.00M	456.00M
EBITDA	637.00M	633.00M	608.00M	448.00M	400.00M
Net Income	337.00M	319.00M	326.00M	241.00M	227.00M
Balance Sheet
Total Assets	4.12B	4.10B	3.71B	3.07B	2.67B
Cash, Cash Equivalents and Short-Term Investments	44.00M	50.00M	0.00	-167.00M	-144.00M
Total Debt	1.88B	1.70B	1.61B	1.11B	878.00M
Total Liabilities	2.08B	2.16B	2.06B	1.52B	1.22B
Stockholders Equity	2.04B	1.94B	1.65B	1.56B	1.45B
Cash Flow
Free Cash Flow	454.00M	265.00M	-58.00M	147.00M	187.00M
Operating Cash Flow	557.00M	408.00M	107.00M	255.00M	251.00M
Investing Cash Flow	-337.00M	-137.00M	-258.00M	-154.00M	-193.00M
Financing Cash Flow	-226.00M	-221.00M	151.00M	-101.00M	-58.00M

Stella-Jones Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 95.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 95.2 is below the 20-day moving average (MA) of 96.88, above the 50-day MA of 91.76, and above the 200-day MA of 82.47, indicating a neutral trend. The MACD of 0.70 indicates Positive momentum. The RSI at 52.06 is Neutral, neither overbought nor oversold. The STOCH value of 73.34 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SJ	69 Neutral	C$5.20B	13.97	17.08%	1.43%	1.98%	7.05%
ADN	66 Neutral	C$312.09M	5.90	4.46%	7.35%	-28.86%	-48.20%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
WFG	56 Neutral	C$7.00B	-7.08	-14.64%	2.21%	-6.67%	-168.27%
CFP	54 Neutral	C$1.58B	-2.07	-15.06%	―	1.76%	34.61%
IFP	47 Neutral	C$614.24M	-1.37	-20.72%	―	-3.63%	31.61%
WEF	46 Neutral	C$152.14M	-1.45	-12.20%	―	2.06%	-46.23%

Stella-Jones Corporate Events

Stella-Jones Hits 2025 Targets and Expands U.S. Infrastructure Footprint

Stella-Jones reported 2025 sales of $3.5 billion, in line with its guidance, with operating income of $516 million and EBITDA of $661 million, reflecting an 18.9% margin and strong cash flow of $557 million. The company met or exceeded its 2023-2025 financial objectives, saw robust volume momentum in utility products despite softer residential and railway tie demand, and maintained a net debt-to-EBITDA ratio of 2.4.

Utility products led fourth-quarter performance with higher volumes driven by new contracts and increased customer purchasing, offsetting weaker railway ties and residential lumber. Building on the recent acquisitions of Locweld and Brooks, Stella-Jones is investing in a new U.S. greenfield steel lattice manufacturing facility to capture accelerating infrastructure spending, reinforcing its push deeper into the utility sector and supporting its 2026-2028 growth targets.

The most recent analyst rating on (TSE:SJ) stock is a Buy with a C$106.00 price target. To see the full list of analyst forecasts on Stella-Jones stock, see the TSE:SJ Stock Forecast page.