tiprankstipranks
Trending News
More News >
Transcontinental (TSE:TCL.A)
TSX:TCL.A

Transcontinental (TCL.A) AI Stock Analysis

Compare
215 Followers

Top Page

TS

Transcontinental

(TSX:TCL.A)

Rating:76Outperform
Price Target:
C$24.00
▲(13.42%Upside)
Transcontinental's overall stock score is bolstered by strong financial and technical performance, complemented by an attractive valuation. The company's stable financial position and solid cash flow generation are significant strengths. The earnings call insights add a balanced perspective with positive earnings growth but highlight sector-specific challenges.
Positive Factors
Business Diversification
The company has taken meaningful steps to diversify its business away from declining printing markets.
Financial Performance
The company declared a special dividend of $1/share, reflecting positive financial performance.
Growth in Retail Services
Retail Services & Printing growth was a key driver of the beat in Q1/25.
Negative Factors
Declining Demand Trends
Approximately 25-35% of EBITDA still has declining demand trends due to the secular decline of printing markets.
Packaging Segment Performance
Packaging adjusted EBITDA was slightly below forecast, with lower volumes partially offset by cost reductions.
Postal Strike Impact
The Canada Post strike is expected to weigh on adjusted EBITDA, with an impact of about $1 million per week.

Transcontinental (TCL.A) vs. iShares MSCI Canada ETF (EWC)

Transcontinental Business Overview & Revenue Model

Company DescriptionTranscontinental Inc. (TCL.A) is a leading Canadian company operating primarily in the packaging, printing, and media sectors. The company is recognized for its flexible packaging solutions and is a prominent player in the printing industry, offering a range of services for retailers, publishers, and marketers. Additionally, Transcontinental manages a diverse portfolio of media properties, including newspapers, magazines, and digital platforms, serving various communities and industries.
How the Company Makes MoneyTranscontinental generates revenue through several key streams. The largest portion of its income comes from its Packaging sector, where it provides flexible plastic and paper packaging solutions to industries such as food, agriculture, and consumer goods. In the Printing sector, Transcontinental earns money by offering integrated printing services, including the production of marketing materials, flyers, and newspapers, as well as premedia and distribution services. The Media segment contributes to revenue by monetizing advertising across its print and digital media properties. The company also engages in strategic partnerships and acquisitions to enhance its market presence and expand its service offerings, contributing to its overall profitability.

Transcontinental Earnings Call Summary

Earnings Call Date:Jun 04, 2025
(Q2-2025)
|
% Change Since: -0.61%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with notable achievements in adjusted net earnings growth and the Retail Services & Printing sector. However, challenges in the Packaging sector and difficulties in Latin America and Ecuador were significant. The positive developments in safety and cash flow generation provided a balance to these challenges.
Q2-2025 Updates
Positive Updates
Improvement in Adjusted Net Earnings
The company reported an 11.5% growth in adjusted net earnings per share in Q2 versus Q2 last year.
Retail Services & Printing Sector Success
Significant increases in revenue and EBITDA were reported, driven by growth in Book Printing, Specialty Solutions, and In-store Marketing businesses.
Safety Improvements
The company reported a 40% year-over-year reduction in incidents, improving from 46 incidents to 28.
Strong Cash Flow Generation
Generated $80.3 million from operating activities in the second quarter, with CapEx at $24.5 million, $5.6 million lower than last year.
Packaging Sector Recovery
Positive volume growth in the Packaging sector was observed in the first month of Q3, including a continued recovery in the medical market.
Negative Updates
Packaging Sector Decline
A 3% organic decline in revenues in the Packaging sector was noted, mainly due to lower volume.
Decrease in Packaging Revenues
Packaging revenues decreased by 2% compared to last year, mainly due to the sale of industrial activities and lower volume.
Challenges in Latin America
The company experienced ongoing weaknesses in the Latin American market due to lower crop yields affecting sales.
Impact of Electricity Shortages in Ecuador
Electricity shortages in Ecuador disrupted operations, impacting profitability more than volume.
Company Guidance
During the TC Transcontinental Second Quarter Fiscal Year 2025 earnings call, the company reported a 0.1% increase in revenues compared to the same period last year, driven by growth in the Retail Services & Printing (RS&P) sector and favorable foreign exchange impacts. The adjusted EBITDA for the quarter was $108.5 million, with an 11.5% growth in adjusted net earnings per share. The company saw a 2% decrease in Packaging revenues to $404 million, mainly due to the sale of industrial activities and lower volumes, while RS&P revenues rose by 5.1% to $279.9 million, with notable growth in Book Printing and In-store Marketing. Safety incidents decreased by 40%, showcasing the company's progress towards a no-injury target. Looking ahead, the company remains optimistic about achieving volume and profit growth in the second half of fiscal 2025, despite challenges such as potential tariffs and labor disputes.

Transcontinental Financial Statement Overview

Summary
Transcontinental exhibits strong gross margins and solid cash flow generation, with a stable financial position. However, there is room for improvement in net profitability and revenue growth consistency. Leverage is under control, supporting financial stability, while cash flows remain robust, underscoring operational efficiency.
Income Statement
68
Positive
Transcontinental's income statement shows moderate profitability and stable revenues. The Gross Profit Margin is strong at 41.5% TTM, indicating efficient production. However, the Net Profit Margin stands at 5.9% TTM, which is relatively low, reflecting challenges in controlling bottom-line expenses. Revenue growth has been inconsistent, with a decline of 4.9% from the previous annual report. EBIT and EBITDA margins are at 9.7% and 17.3% TTM, respectively, showing reasonable operating efficiency.
Balance Sheet
73
Positive
The balance sheet indicates a solid equity position with an Equity Ratio of 54.3% TTM, suggesting financial stability. The Debt-to-Equity Ratio is at 0.51 TTM, indicating manageable leverage levels. Return on Equity is moderate at 8.3% TTM, pointing to efficient use of equity but also room for improvement in generating higher returns for shareholders.
Cash Flow
75
Positive
Transcontinental's cash flow statement shows a robust operational cash flow with an Operating Cash Flow to Net Income Ratio of 2.3 TTM, indicating strong cash generation relative to reported profits. Free Cash Flow to Net Income Ratio is also healthy at 1.7 TTM. However, Free Cash Flow has marginally declined by 6.6% compared to the previous year, hinting at slight pressures on free cash generation.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
2.78B2.81B2.94B2.96B2.64B2.57B
Gross Profit
1.15B1.38B457.30M1.32B1.24B1.25B
EBIT
270.40M209.50M164.70M217.30M233.80M241.40M
EBITDA
479.70M416.30M391.70M446.00M450.00M479.60M
Net Income Common Stockholders
163.00M121.30M85.80M141.20M130.60M131.70M
Balance SheetCash, Cash Equivalents and Short-Term Investments
273.10M185.20M137.00M45.70M231.10M241.00M
Total Assets
3.62B3.64B3.70B3.80B3.61B3.60B
Total Debt
994.20M989.00M1.06B1.15B1.13B1.17B
Net Debt
721.10M803.80M921.00M1.10B894.80M933.90M
Total Liabilities
1.65B1.73B1.79B1.92B1.85B1.86B
Stockholders Equity
1.96B1.91B1.90B1.88B1.76B1.73B
Cash FlowFree Cash Flow
272.90M292.20M294.80M78.40M177.00M329.50M
Operating Cash Flow
379.90M413.70M472.30M220.80M315.30M427.00M
Investing Cash Flow
32.60M-112.60M-165.20M-257.40M-181.00M126.40M
Financing Cash Flow
-198.90M-258.00M-216.30M-150.90M-150.10M-526.40M

Transcontinental Technical Analysis

Technical Analysis Sentiment
Positive
Last Price21.16
Price Trends
50DMA
19.22
Positive
100DMA
17.99
Positive
200DMA
17.00
Positive
Market Momentum
MACD
0.57
Positive
RSI
60.41
Neutral
STOCH
34.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TCL.A, the sentiment is Positive. The current price of 21.16 is above the 20-day moving average (MA) of 20.97, above the 50-day MA of 19.22, and above the 200-day MA of 17.00, indicating a bullish trend. The MACD of 0.57 indicates Positive momentum. The RSI at 60.41 is Neutral, neither overbought nor oversold. The STOCH value of 34.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TCL.A.

Transcontinental Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSDCM
79
Outperform
C$95.13M13.2021.19%1.45%-5.30%
TSGDI
77
Outperform
C$776.60M20.407.93%1.49%152.09%
76
Outperform
C$1.76B9.889.65%4.25%-2.58%100.21%
63
Neutral
$6.96B11.512.80%3.85%2.70%-24.43%
TSCGY
58
Neutral
C$463.19M11,008.110.01%2.60%3.03%-99.78%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TCL.A
Transcontinental
21.07
8.02
61.46%
TSE:GDI
GDI Integrated
32.96
0.96
3.00%
TSE:DCM
Data Commun Management
2.04
-0.41
-16.73%
TSE:CGY
Calian Group
44.67
-10.26
-18.68%

Transcontinental Corporate Events

DividendsFinancial Disclosures
Transcontinental Inc. Reports Strong Q2 2025 Financial Results
Positive
Jun 5, 2025

Transcontinental Inc. reported its second-quarter fiscal year 2025 results, highlighting a slight increase in revenues to $684.1 million and a significant rise in net earnings attributable to shareholders by 112.6% compared to the previous year. The company successfully reduced its long-term debt, enabling it to pay a special dividend and maintain financial flexibility for future acquisitions. Despite a decrease in the Packaging Sector’s performance, the Retail Services and Printing Sector showed strong growth, contributing to the overall positive financial results.

The most recent analyst rating on ($TSE:TCL.A) stock is a Buy with a C$19.00 price target. To see the full list of analyst forecasts on Transcontinental stock, see the TSE:TCL.A Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Transcontinental Inc. Announces Successful Election of Directors
Positive
Mar 11, 2025

Transcontinental Inc. announced the successful election of all proposed directors at its Annual Meeting of Shareholders, with each candidate receiving a majority of votes. This outcome reflects strong shareholder support and is likely to reinforce the company’s strategic direction and governance, potentially impacting its operations and stakeholder relations positively.

DividendsBusiness Operations and StrategyFinancial Disclosures
Transcontinental Inc. Reports Strong Q1 2025 Results Amid Strategic Initiatives
Positive
Mar 11, 2025

Transcontinental Inc. reported strong financial results for the first quarter of fiscal 2025, with revenues of $643 million and net earnings of $55.6 million. The company improved its net indebtedness ratio and declared a special dividend, reflecting a solid financial position. Despite weaker demand in certain sectors, cost-reduction initiatives and growth in cheese and dairy packaging helped maintain profitability. The Retail Services and Printing Sector saw a 6.1% increase in adjusted operating earnings, aided by a favorable product mix and increased book printing activities.

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.