Transcontinental Inc. Class B (TCL.B) AI Stock Analysis

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Transcontinental Inc. Class B

(TSX:TCL.B)

71Outperform

Transcontinental Inc. has a stable financial position with strong cash generation and a robust balance sheet, although it faces challenges in revenue growth. The technical indicators suggest stability, but limited upward momentum. The valuation is attractive, balancing growth and income potential. Earnings call insights emphasize profitability improvements and debt reduction, though revenue challenges and external risks remain. Overall, the score reflects a balanced outlook with potential for growth, supported by strategic initiatives.

Transcontinental Inc. Class B (TCL.B) vs. S&P 500 (SPY)

Market Cap

C$1.58B

Dividend Yield4.78%

Average Volume (3M)134.00

Price to Earnings (P/E)9.8

Beta (1Y)0.54

Revenue Growth-4.75%

EPS Growth68.04%

CountryCA

Employees7,400

SectorConsumer Cyclical

Sector Strength59

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)1.92

Shares Outstanding9,506,272

10 Day Avg. Volume260

30 Day Avg. Volume134

Financial Highlights & Ratios

PEG Ratio0.14

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Transcontinental Inc. Class B Business Overview & Revenue Model

Company DescriptionTranscontinental Inc. Class B (TCL.B) is a leading Canadian company primarily engaged in flexible packaging, printing, and media. With operations spanning across North America, the company offers a wide range of products and services including packaging solutions for various industries such as food and beverage, agriculture, and industrial products, as well as printing services for newspapers, magazines, and marketing materials. Transcontinental also operates in the media sector, providing content creation and distribution services.

How the Company Makes MoneyTranscontinental Inc. generates revenue through multiple streams. The flexible packaging segment, which is the largest component of its business, involves the production and sale of packaging products to clients in the food and beverage, agriculture, and industrial sectors. This segment capitalizes on long-term contracts and partnerships with key clients, ensuring a stable revenue flow. In the printing sector, the company offers services for newspapers, magazines, and other printed materials, leveraging its extensive infrastructure and expertise to serve a wide array of customers. Although the media segment is smaller, it contributes to earnings through advertising, subscription fees, and content licensing. The company's diversified revenue model, backed by significant client relationships and a broad geographic presence, underpins its financial performance.

Transcontinental Inc. Class B Financial Statement Overview

Summary

Transcontinental Inc. shows a stable financial footing with adequate profitability and healthy leverage. The company manages operational costs effectively, but there is room for profit margin and revenue growth improvements. A robust balance sheet with manageable debt levels and strong cash generation, although recent declines in free cash flow are noted.

Income Statement

Positive

Transcontinental Inc. has shown moderate financial performance over recent periods. The gross profit margin for TTM stands at 41.53%, indicating efficient cost management. However, the net profit margin is lower at 5.87%, reflecting limited bottom-line profitability. Revenue has seen fluctuations, with a recent decline in TTM compared to previous annual figures, suggesting potential challenges in maintaining sales growth. The EBIT and EBITDA margins are 9.74% and 17.28% respectively, indicating operational efficiency but also highlighting room for improvement in profitability.

Balance Sheet

Positive

The balance sheet reveals a stable financial position with a debt-to-equity ratio of 0.51, indicating moderate leverage. The return on equity (ROE) for TTM is 8.30%, which is reasonable but suggests potential for enhanced returns on equity investments. An equity ratio of 54.29% in the TTM reflects a strong capital structure with a solid equity base. Overall, the company maintains a balanced approach to leveraging debt and equity, though there is scope for increasing returns.

Cash Flow

Positive

Cash flow analysis shows a slight decrease in free cash flow, with a growth rate of -6.58%. The operating cash flow to net income ratio is 2.33, indicating strong cash generation relative to net income. Additionally, the free cash flow to net income ratio is 1.67, demonstrating effective cash conversion from profits. The company efficiently manages its cash flow operations, although recent free cash flow contraction warrants attention.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.81B	2.94B	2.96B	2.64B	2.57B
	Gross Profit
1.38B	457.30M	1.32B	1.24B	1.25B
	EBIT
209.50M	164.70M	217.30M	233.80M	241.40M
	EBITDA
416.30M	391.70M	446.00M	450.00M	479.60M
	Net Income Common Stockholders
121.30M	85.80M	141.20M	130.60M	131.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
185.20M	137.00M	45.70M	231.10M	241.00M
	Total Assets
3.64B	3.70B	3.80B	3.61B	3.60B
	Total Debt
989.00M	1.06B	1.15B	1.13B	1.17B
	Net Debt
803.80M	921.00M	1.10B	894.80M	933.90M
	Total Liabilities
1.73B	1.79B	1.92B	1.85B	1.86B
	Stockholders Equity
1.91B	1.90B	1.88B	1.76B	1.73B
Cash Flow		Free Cash Flow
292.20M	294.80M	78.40M	177.00M	329.50M
	Operating Cash Flow
413.70M	472.30M	220.80M	315.30M	427.00M
	Investing Cash Flow
-112.60M	-165.20M	-257.40M	-181.00M	126.40M
	Financing Cash Flow
-258.00M	-216.30M	-150.90M	-150.10M	-526.40M

Transcontinental Inc. Class B Technical Analysis

Technical Analysis Sentiment

Positive

Last Price18.84

Price Trends

50DMA

17.26

Positive

100DMA

16.83

Positive

200DMA

16.01

Positive

Market Momentum

MACD

0.48

Negative

RSI

65.43

Neutral

STOCH

65.91

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TCL.B, the sentiment is Positive. The current price of 18.84 is above the 20-day moving average (MA) of 17.75, above the 50-day MA of 17.26, and above the 200-day MA of 16.01, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 65.43 is Neutral, neither overbought nor oversold. The STOCH value of 65.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TCL.B.

Transcontinental Inc. Class B Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WPK	73 Outperform	C$2.65B	13.04	11.26%	0.42%	5.50%	9.93%
TCL.B	71 Outperform	C$1.58B	9.84	8.50%	4.78%	-4.75%	68.04%
RCH	67 Neutral	C$1.79B	21.28	9.08%	1.88%	4.21%	-18.67%
Sector *	61 Neutral	$6.65B	11.64	3.00%	3.98%	2.61%	-21.41%
CAS	57 Neutral	$893.79M	―	-1.80%	5.39%	1.36%	59.36%
CFP	51 Neutral	$1.59B	―	-18.83%	―	-3.20%	-107.88%
IFP	48 Neutral	$731.67M	―	-18.73%	―	-8.81%	-13.99%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:TCL.B

Transcontinental Inc. Class B

18.84

6.27

49.88%

TSE:IFP

Interfor

14.22

-3.58

-20.11%

TSE:CAS

Cascades

8.85

-0.18

-2.00%

TSE:CFP

Canfor

13.58

-1.23

-8.31%

TSE:RCH

Richelieu Hardware

32.28

-6.46

-16.68%

TSE:WPK

Winpak

42.95

2.09

5.12%

Transcontinental Inc. Class B Earnings Call Summary

Earnings Call Date:Mar 11, 2025

(Q1-2025)

% Change Since: 20.61%|

Next Earnings Date:Jun 04, 2025

Earnings Call Sentiment Neutral

The earnings call highlights a strong focus on profitability and debt reduction, with successful cost management and strategic asset sales boosting financial health. However, revenue declines and external challenges like tariffs and labor conflicts pose risks. The company remains confident in its strategic initiatives to drive future growth.

Q1-2025 Updates

Positive Updates

Profitability Improvement

Transcontinental achieved a strong quarter with consolidated adjusted EBITDA of $97.5 million, growing by $1.4 million despite challenges.

Debt Reduction

Net debt ratio was reduced to 1.53 times following the sale of industrial packaging activities and strong cash flow generation.

Special Dividend Announcement

Announced a special dividend of $1 per share due to strong financial position and recent asset sales.

Cost Reduction Efforts

Continued benefits from cost reduction initiatives, maintaining a 15.2% EBITDA margin in the Packaging sector despite volume declines.

Retail Services and Printing Resilience

Achieved third consecutive quarter of profitability increase in Retail Services and Printing sector, despite labor conflicts and volume pressures.

Negative Updates

Revenue Decline

A 5.5% decrease in revenues compared to the same quarter last year due to lower volumes and sale of industrial packaging activities.

Packaging Sector Challenges

2.2% revenue decrease in the Packaging sector due to lower volumes and continued weakness in Latin American and medical markets.

Impact of Canada Post Labor Conflict

Labor conflict at Canada Post negatively impacted the Retail Services and Printing sector, leading to $3 million in excluded costs.

Cross-Border Tariffs Uncertainty

Potential impact from tariffs on approximately 10% of combined sales, with ongoing efforts to mitigate the impact.

Company Guidance

During the TC Transcontinental First Quarter Fiscal Year 2025 Results Conference Call, the company provided guidance for the fiscal year, emphasizing several key metrics. The company reported a 5.5% decrease in revenues for the first quarter, attributed to lower volumes and the sale of industrial packaging activities, but highlighted a strong adjusted EBITDA of $97.5 million, representing an increase of $1.4 million from the previous year. The adjusted earnings per share improved by 14%, from $0.43 to $0.49. The Packaging sector saw a 2.2% revenue decrease to $389.4 million, with an adjusted EBITDA margin maintained at 15.2%. Meanwhile, the Retail Services and Printing sector experienced a 9.2% revenue decline to $240.7 million, but adjusted EBITDA grew by 6.1% to $41.9 million. The company reduced its net debt ratio to 1.53 times, the lowest since the acquisition of Coveris Americas in 2018, and announced a special dividend of $1 per share. Despite the challenges posed by tariffs, TC Transcontinental remains confident in its outlook, expecting growth in the Packaging sector and stable adjusted EBITDA for the Retail Services and Printing sector.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.