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Transcontinental (TSE:TCL.A)
TSX:TCL.A

Transcontinental (TCL.A) AI Stock Analysis

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Transcontinental

(TSX:TCL.A)

Rating:73Outperform
Price Target:
C$23.00
▲(12.14%Upside)
Transcontinental's high valuation score and solid technical indicators are the most significant positives. Financial stability and recent earnings call insights support the stock's potential, though challenges in the Packaging sector and revenue growth concerns moderate the overall outlook.
Positive Factors
Earnings
Retail Services & Printing adjusted EBITDA was above forecast, driven by cost reductions despite lower volumes.
Financial Performance
The company declared a special dividend of $1/share, reflecting positive financial performance.
Negative Factors
Market Demand
Approximately 25-35% of EBITDA is still tied to markets with declining demand trends.

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

Transcontinental Business Overview & Revenue Model

Company DescriptionTranscontinental Inc. engages in the flexible packaging business in Canada, the United States, Latin America, the United Kingdom, Australia, and New Zealand. It operates through Packaging, Printing, and Media sectors. The Packaging sector engages in the extrusion, lamination, printing, and converting packaging solutions; and manufacturing and recycling flexible plastic, including rollstock, bags and pouches, coextruded films, shrink films and bags, and advanced coatings. This sector serves cheese and dairy, coffee and tea, meat and protein, pet food, agriculture, beverage, confectionery, industrial, and consumer product markets, as well as supermarkets. The Printing sector provides integrated services for retailers, such as premedia services, flyer and in-store, and door-to-door marketing product printing distribution, as well as print solutions for newspapers, magazines, 4-color books, and personalized and mass marketing products. The Media sector is involved in printing and digital publishing of educational and trade books, and specialized publications for professionals and newspapers in French and English. Transcontinental Inc. was founded in 1976 and is headquartered in Montreal, Canada.
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: -2.61%|
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's financials show stable cost management and moderate profitability, with a strong balance sheet and consistent cash flow. However, the lack of significant revenue growth constrains higher performance scores.
Income Statement
65
Positive
Transcontinental's income statement shows a stable gross profit margin of approximately 50% over the TTM, indicating efficient cost management. However, the net profit margin is modest at 6.5% for the TTM, slightly improved from 4.3% annually. Revenue has experienced slight fluctuations, with a recent annual decline but stable TTM figures. EBIT and EBITDA margins are stable, suggesting consistent operating efficiency. While profitability is stable, the lack of significant revenue growth is a concern.
Balance Sheet
70
Positive
The balance sheet indicates a strong equity position with a debt-to-equity ratio of 0.45 in the TTM, reflecting moderate leverage. The return on equity is improving, at 9.7% for the TTM, up from 6.4% annually, showing better profitability relative to equity. The equity ratio is robust at 56.7%, indicating a solid asset base funded by equity. The company is financially stable with manageable debt levels and improving returns.
Cash Flow
68
Positive
Cash flow analysis reveals a stable free cash flow position with a minor decline in the TTM. The operating cash flow to net income ratio is strong at 2.1, indicating efficient cash conversion. However, the free cash flow to net income ratio is slightly lower at 1.6, suggesting capital expenditure demands. Overall, the cash flow position is stable but reflects the need for ongoing investment.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.78B2.81B2.94B2.96B2.64B2.57B
Gross Profit1.38B1.38B1.36B1.32B1.25B1.25B
EBITDA498.10M416.30M391.70M447.50M450.00M482.10M
Net Income180.90M121.30M85.80M141.20M130.60M131.70M
Balance Sheet
Total Assets3.29B3.64B3.70B3.80B3.61B3.60B
Cash, Cash Equivalents and Short-Term Investments43.20M185.20M137.00M45.70M231.10M241.00M
Total Debt842.70M989.00M1.06B1.15B1.13B1.17B
Total Liabilities1.42B1.73B1.79B1.92B1.85B1.86B
Stockholders Equity1.86B1.91B1.90B1.88B1.76B1.73B
Cash Flow
Free Cash Flow285.80M292.20M294.80M78.40M177.00M329.50M
Operating Cash Flow387.20M413.70M472.30M220.80M315.30M427.00M
Investing Cash Flow38.10M-112.60M-165.20M-257.40M-181.00M126.40M
Financing Cash Flow-444.90M-258.00M-216.30M-150.90M-150.10M-526.40M

Transcontinental Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price20.51
Price Trends
50DMA
20.13
Positive
100DMA
18.37
Positive
200DMA
17.25
Positive
Market Momentum
MACD
0.13
Positive
RSI
48.28
Neutral
STOCH
29.84
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TCL.A, the sentiment is Neutral. The current price of 20.51 is below the 20-day moving average (MA) of 20.81, above the 50-day MA of 20.13, and above the 200-day MA of 17.25, indicating a neutral trend. The MACD of 0.13 indicates Positive momentum. The RSI at 48.28 is Neutral, neither overbought nor oversold. The STOCH value of 29.84 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:TCL.A.

Transcontinental Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSGDI
74
Outperform
C$756.80M19.887.93%1.49%152.09%
73
Outperform
C$1.72B9.609.65%23.89%-2.58%100.21%
TSDCM
69
Neutral
C$107.85M14.9721.19%2.56%-5.30%
TSCGY
67
Neutral
C$568.84M13,518.920.01%2.24%3.03%-99.78%
62
Neutral
$16.76B11.38-7.38%2.96%1.59%-23.30%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TCL.A
Transcontinental
20.51
7.04
52.26%
TSE:CGY
Calian Group
50.37
-1.29
-2.50%
TSE:DCM
Data Commun Management
1.95
-0.45
-18.75%
TSE:GDI
GDI Integrated
32.12
-0.97
-2.93%

Transcontinental Corporate Events

M&A TransactionsBusiness Operations and Strategy
TC Transcontinental Expands In-Store Marketing with Middleton Group Acquisition
Positive
Jun 30, 2025

TC Transcontinental has announced the acquisition of Middleton Group, a provider of retail services and point-of-purchase display solutions, to enhance its in-store marketing activities. This strategic move bolsters TC Transcontinental’s leadership in the Canadian market and aligns with the growing emphasis on in-store customer experiences. The acquisition is expected to bring transformative opportunities for both companies, expanding their capabilities and market reach.

The most recent analyst rating on ($TSE:TCL.A) stock is a Hold with a C$18.00 price target. To see the full list of analyst forecasts on Transcontinental stock, see the TSE:TCL.A Stock Forecast page.

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.

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.Date of analysis: Jul 01, 2025