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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
$4.68B
Dividend Yield1.46%
Average Volume (3M)95.11K
Price to Earnings (P/E)14.0
Beta (1Y)0.38
Revenue Growth1.98%
EPS Growth7.05%
CountryCA
Employees3,000
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)1.59
Shares Outstanding54,907,310
10 Day Avg. Volume96,619
30 Day Avg. Volume95,114
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 Cap1.25
Enterprise Value/Revenue1.69
Enterprise Value/Gross Profit8.39
Enterprise Value/Ebitda9.07
Forecast
1Y Price Target
$89.39Price Target Upside7.87% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 11, 2026
Earnings Call Sentiment Neutral
The earnings call reflected a balanced view with strong sales growth, strategic acquisitions, and robust cash generation being offset by challenges in railway ties volumes and spot market pricing. The company remains optimistic about its strategic initiatives and long-term growth trajectory.Q3-2025 Updates
Positive Updates
Organic Sales Growth
The company reported a 2% organic sales growth compared to the prior year quarter, driven by higher infrastructure volumes, primarily for utility poles.
EBITDA Increase
EBITDA increased to $171 million with a solid EBITDA margin of 17.8%, led by higher volumes.
Utility Poles Sales Growth
Sales for utility poles increased to $480 million in the third quarter, up from $448 million in the same period in 2024, driven by a 5% volume increase.
Brooks Acquisition
The company announced the closing of the Brooks acquisition, expanding its product offering and presence in the wood distribution crossarm and transmission framing component markets.
Strong Cash Generation
Cash generated from operating activities was $198 million compared to $186 million in Q3 last year, aided by a reduction in inventory.
New ESG Milestones
The company published its latest ESG report, highlighting progress in sustainability efforts, including limited assurance of Scope 1 and Scope 2 greenhouse gas emissions.
Negative Updates
Railway Ties Volume Decline
Railway ties sales were impacted by a Class 1 customer treating their railway ties internally, resulting in a mid-single-digit year-over-year decline expectation.
Spot Market Pricing Pressure
The slower demand in the spot market for utility poles continued to impact spot pricing, which remained below 2024 levels.
Inventory Cost Impact on Residential Lumber
Residential lumber sales increased due to higher pricing, but this was supported by elevated inventory costs, indicating potential margin pressures.
Company Guidance
During Stella-Jones' third quarter 2025 earnings call, the company provided detailed guidance and metrics reflecting its financial health and strategic initiatives. Organic sales growth was reported at 2%, boosted by higher infrastructure volumes, with total sales up 5% year-over-year due to acquisitions. The utility poles segment saw sales increase to $480 million, a rise from $448 million in 2024. However, spot market pricing pressures led to a 3% decline in utility pole pricing. The railway ties segment showed a slight increase in sales to $211 million, driven by improved pricing, while residential lumber sales rose to $201 million due to higher inventory costs. The company maintained strong EBITDA margins of 17.8%, with an EBITDA of $171 million. Cash flows from operations exceeded $500 million over the past 12 months, supporting strategic investments and shareholder returns, including a new normal course issuer bid for share buybacks. The company also highlighted its ongoing commitment to ESG initiatives, such as reducing greenhouse gas emissions. Looking ahead, Stella-Jones expects utility pole sales growth in the low-single-digit range for 2025 and is focusing on strategic acquisitions like Brooks to enhance its product offerings and market presence.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
82.87
Price Trends
80.25
Positive
79.37
Positive
74.67
Positive
Market Momentum
1.35
Negative
54.75
Neutral
77.42
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 82.87 is above the 20-day moving average (MA) of 81.14, above the 50-day MA of 80.25, and above the 200-day MA of 74.67, indicating a bullish trend. The MACD of 1.35 indicates Negative momentum. The RSI at 54.75 is Neutral, neither overbought nor oversold. The STOCH value of 77.42 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 | $4.68B | 13.97 | 17.08% | 1.46% | 1.98% | 7.05% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
58 Neutral | C$256.93M | 16.89 | 4.46% | 9.58% | -28.86% | -48.20% | |
48 Neutral | C$6.67B | -19.22 | -3.61% | 2.14% | -6.67% | -168.27% | |
48 Neutral | $1.42B | -3.09 | -15.06% | ― | 1.76% | 34.61% | |
45 Neutral | C$122.05M | -5.65 | -12.20% | ― | 2.06% | -46.23% | |
45 Neutral | $404.43M | ― | -20.72% | ― | -3.63% | 31.61% |
* Basic Materials Sector Average
TSE:SJ
Stella-Jones
82.87
14.15
20.59%
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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.