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Transcontinental Inc. Class B (TSE:TCL.B)
TSX:TCL.B
Canadian Market

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

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Transcontinental Inc. Class B

(TSX:TCL.B)

Rating:74Outperform
Price Target:
C$23.00
▲(11.43%Upside)
The overall stock score of Transcontinental Inc. Class B is primarily driven by its solid financial performance and attractive valuation. While technical indicators show moderate momentum, the company's strong cash flow and dividend yield enhance its appeal. Earnings call insights reveal both growth opportunities and challenges, particularly in the Packaging sector.

Transcontinental Inc. Class B (TCL.B) vs. iShares MSCI Canada ETF (EWC)

Transcontinental Inc. Class B 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 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 Earnings Call Summary

Earnings Call Date:Jun 04, 2025
(Q2-2025)
|
% Change Since: -3.51%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed performance for TC Transcontinental. The Retail Services & Printing sector showed strong growth and profitability improvements, contributing positively to the overall financial health of the company. However, the Packaging sector faced revenue declines and challenges in Latin America. The company remains confident in its outlook, supported by a strong financial position and effective cost management.
Q2-2025 Updates
Positive Updates
Positive Growth in Retail Services & Printing
Retail Services & Printing sector experienced a strong quarter with a 5.1% increase in revenues to $279.9 million and a 15.5% growth in adjusted EBITDA to $54.4 million, marking the fourth consecutive quarter of profitability improvement.
Improvement in Safety Metrics
The company reported a significant year-over-year improvement in safety incidents, reducing from 46 incidents to 28, a decrease of 40%.
Strong Financial Position
Despite a special dividend, the net debt ratio remained healthy at 1.70x. Financial expenses decreased by $5.4 million due to lower debt levels and lower interest rates.
Adjusted Earnings Per Share Increase
Adjusted net earnings per share grew by 11.5% from $0.52 to $0.58.
Negative Updates
Decline in Packaging Revenue
Packaging sector generated revenues of $404 million, a 2% decrease compared to the previous year, primarily due to the sale of industrial activities and lower volumes across most markets.
Challenges in Latin America
The Latin American market faced challenges due to lower crop yields, impacting sales negatively.
Potential Impact of Tariffs and Labor Issues
While the impact of tariffs and labor issues at Canada Post is currently minimal, there is some uncertainty regarding future effects.
Media Segment Decline
The Media segment saw a decrease in revenues and profitability due to the end of a significant contract.
Company Guidance
During the TC Transcontinental Second Quarter Fiscal Year 2025 Results Conference Call, the company reported a 0.1% increase in revenues compared to the same quarter last year, primarily driven by growth in the Retail Services & Printing sector and a favorable foreign exchange impact. Adjusted EBITDA for the quarter stood at $108.5 million, with adjusted net earnings per share increasing by 11.5% to $0.58. The Packaging sector experienced a 2% decrease in revenues, attributed to the sale of industrial activities and lower volumes, although it maintained a solid EBITDA margin of 16.2%. In contrast, the Retail Services & Printing sector saw a 5.1% increase in revenues, fueled by growth in Book Printing, Specialty Solutions, and In-store Marketing. The company also highlighted significant cost reductions contributing to these results. Safety improvements were noted, with a 40% year-over-year decrease in incidents. Looking ahead, the company remains optimistic about achieving organic volume and profit growth in the second half of fiscal 2025, supported by a strong sales pipeline and continued cost management efforts.

Transcontinental Inc. Class B Financial Statement Overview

Summary
Transcontinental Inc. Class B exhibits solid financial health with stable profitability margins and a strong equity base. Despite slightly negative revenue growth, the company demonstrates strong cash flow and financial flexibility. Continued focus on revenue expansion and leverage management will be crucial for future growth.
Income Statement
75
Positive
Transcontinental Inc. Class B's income statement shows a stable gross profit margin at 49.8% for TTM, indicating efficient production and service delivery. The net profit margin for TTM is 6.5%, reflecting a moderate level of profitability. The revenue growth has been slightly negative at -1.3% TTM compared to the previous year, which raises concerns about growth potential. The EBIT margin of 10.4% and EBITDA margin of 17.9% indicate solid operating performance, though there is room for improvement in converting revenue to profit.
Balance Sheet
70
Positive
The balance sheet reveals a debt-to-equity ratio of 0.45 TTM, reflecting a moderate level of leverage, which is manageable but should be monitored. The return on equity (ROE) for TTM is 9.7%, indicating decent profitability for shareholders, though there is potential for enhancement. The equity ratio of 56.7% suggests a strong capital base, providing financial stability and reducing insolvency risk.
Cash Flow
80
Positive
Cash flow analysis shows a healthy operating cash flow to net income ratio of 2.1 TTM, demonstrating strong cash generation from operations. The free cash flow to net income ratio is 1.58 for TTM, indicating robust free cash flow relative to net earnings. Despite a minor decline in free cash flow growth rate at -2.2%, the company maintains good liquidity and financial flexibility.
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 Inc. Class B Technical Analysis

Technical Analysis Sentiment
Positive
Last Price20.64
Price Trends
50DMA
20.11
Positive
100DMA
18.44
Positive
200DMA
17.16
Positive
Market Momentum
MACD
0.13
Positive
RSI
51.05
Neutral
STOCH
>-0.01
Positive
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 20.64 is below the 20-day moving average (MA) of 20.98, above the 50-day MA of 20.11, and above the 200-day MA of 17.16, indicating a neutral trend. The MACD of 0.13 indicates Positive momentum. The RSI at 51.05 is Neutral, neither overbought nor oversold. The STOCH value of >-0.01 is Positive, 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
C$1.75B9.669.65%23.74%-2.58%100.21%
TSDCM
71
Outperform
C$99.56M13.8121.19%2.78%-5.30%
62
Neutral
$16.72B10.85-7.48%3.11%1.66%-24.52%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TCL.B
Transcontinental Inc. Class B
20.64
6.88
50.00%
TSE:DCM
Data Commun Management
1.84
-0.52
-22.03%
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: Jun 24, 2025