Stella-Jones (TSE:SJ) Posts Quarterly Earnings Results

Stella-Jones (TSE:SJ) announced its earnings results on Thursday. The company reported C$1.59 earnings per share (EPS) for the quarter, FiscalAI reports. The firm had revenue of C$1.04 billion during the quarter. Stella-Jones had a return on equity of 14.85% and a net margin of 8.66%.

Here are the key takeaways from Stella-Jones’ conference call:

• Second-quarter profitability declined: Adjusted EBITDA fell to CAD 167 million, with margin decreasing to 16% from 18.3% a year earlier. Higher environmental and maintenance costs, fuel expenses, steel-structure expansion inefficiencies, and delayed pricing recovery weighed on results.
• Utility products remained the main growth driver: Sales rose 7% to CAD 510 million, supported by the Crossarms acquisition and continued wood utility pole volume growth. Management maintained its full-year mid-single-digit organic growth outlook for wood utility poles despite weather-related delays in Texas.
• Margin recovery and efficiency initiatives are expected: Management said normalized second-quarter margin would have been approximately 17.5% and expects improvement in the second half as steel-structure inefficiencies and one-time costs ease. Pole and railway-tie network optimization initiatives are expected to generate approximately CAD 10–12 million and CAD 10–15 million, respectively, in annual profitability improvements beginning in 2027.
• Railway ties faced lower Class I volumes but commercial demand helped offset the decline: First-half sales were down 2%, while management expects full-year volumes to range from flat to down 2%. Treating-services-only, or TSO, volumes are expected to represent 5%–10% of tie sales going forward, improving returns but reducing reported revenue per unit.
• Growth capacity and balance-sheet flexibility remain strong: Candiac’s steel-structure modernization is on track to double capacity to 20,000 tons by the third quarter, with substantial demand secured through 2027, while the planned Fayetteville facility is expected to add another 20,000 tons by 2028. The company also reduced net debt by more than CAD 100 million in the first half and ended the quarter with CAD 759 million of liquidity.

Stella-Jones Stock Down 5.8%

Shares of TSE:SJ opened at C$74.62 on Friday. The company has a market cap of C$4.07 billion, a price-to-earnings ratio of 13.52, a PEG ratio of 2.40 and a beta of -0.07. The firm’s 50-day simple moving average is C$79.50 and its 200-day simple moving average is C$85.39. The company has a quick ratio of 1.20, a current ratio of 4.96 and a debt-to-equity ratio of 80.71. Stella-Jones has a fifty-two week low of C$69.94 and a fifty-two week high of C$101.31.

Wall Street Analysts Forecast Growth

SJ has been the subject of a number of research reports. Scotiabank reduced their price objective on Stella-Jones from C$99.00 to C$97.00 and set a “sector outperform” rating for the company in a research note on Tuesday, April 28th. Canadian Imperial Bank of Commerce decreased their price target on shares of Stella-Jones from C$87.00 to C$82.00 in a research note on Thursday, July 9th. Desjardins dropped their price objective on shares of Stella-Jones from C$107.00 to C$104.00 and set a “buy” rating on the stock in a research note on Thursday, May 7th. Royal Bank Of Canada decreased their target price on shares of Stella-Jones from C$85.00 to C$82.00 in a research note on Thursday, July 9th. Finally, TD lowered their price target on Stella-Jones from C$106.00 to C$93.00 and set a “buy” rating on the stock in a report on Monday, May 11th. Five analysts have rated the stock with a Buy rating and three have given a Hold rating to the stock. According to MarketBeat.com, Stella-Jones presently has a consensus rating of “Moderate Buy” and an average target price of C$93.75.

Insider Buying and Selling

In other Stella-Jones news, Director Kevin Patrick Comerford bought 500 shares of the company’s stock in a transaction on Monday, May 11th. The shares were bought at an average price of C$72.06 per share, for a total transaction of C$36,030.00. Following the transaction, the director owned 6,176 shares of the company’s stock, valued at approximately C$445,042.56. This trade represents a 8.81% increase in their position. Also, Director Anne Elizabeth Giardini bought 1,000 shares of the business’s stock in a transaction dated Monday, May 11th. The shares were acquired at an average cost of C$71.25 per share, with a total value of C$71,250.00. Following the completion of the purchase, the director owned 3,400 shares in the company, valued at approximately C$242,250. This represents a 41.67% increase in their position. Insiders bought 3,443 shares of company stock valued at $247,814 over the last ninety days. Corporate insiders own 0.14% of the company’s stock.

About Stella-Jones

Stella-Jones Inc produces and sells lumber and wood products. The company operates in two segments: Pressure-treated wood, which includes utility poles, railway ties, residential lumber, and industrial products; and Logs & Lumber segment comprises of the sales of logs harvested in the course of the company’s procurement process that is determined to be unsuitable for use as utility poles, it also includes the sale of excess lumber to local home-building markets. The vast majority of its revenue comes from the Pressure-treated wood segment.