Algoma Central Corporation (ALC.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Algoma Central Corporation owns and operates a fleet of dry and liquid bulk carriers on the Great Lakes - St. Lawrence Waterway in Canada.The company operates in six segments: Domestic Dry-Bulk, Product Tankers, Ocean Self-Unloaders, Global Short Sea Shipping, Investment Properties, and Corporate.It operates self-unloading bulk carriers; and owns and manages tankers for the transportation of liquid petroleum products throughout the Great Lakes, the St. Lawrence waterway, and the Atlantic Canada regions.

The company also owns eight ocean-going self-unloading vessels that carry coal for power generation, crushed aggregates for construction, gypsum for wallboard manufacturing, iron ore for the steel industry, and salt for winter road safety.In addition, it provides management services to third parties, as well as owns a shopping center.It serves iron and steel, aggregate, cement and building material, and salt producers; agricultural product distributors; and oil refiners, wholesale distributors, and large consumers of petroleum products.

The company was formerly known as Algoma Central Railway and changed its name to Algoma Central Corporation in 1990.Algoma Central Corporation was incorporated in 1899 and is headquartered in St. Catharines, Canada.

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1.b. Last Insights on ALC

The recent performance of Algoma Central Corporation was driven by its improved profitability, with net earnings increasing by 10.8% year-over-year to $91,638 in 2024. The company also reported higher earnings per share (EPS) of $2.29, up from $2.15 in 2023. Additionally, Algoma announced a 5.3% increase in its quarterly dividend to $0.20 per common share, providing value to shareholders. The company's delivery of three new ships within one week, a first in its history, also highlights its growth and expansion efforts.

1.c. Company Highlights

Last Price	18.99
Change Percentage	-0.84%
Open	18.97
Previous Close	19.15
Market Cap ( Millions)	770
Volume	3371
Year High	19.15
Year Low	14.07
M A 50	17.86
M A 200	16.43

FCF Yield	-11.45%
Dividend Yield	4.21%
ROE	11.58%
Debt / Equity	69.44%
Net Debt / EBIDTA	344.87%
Price To Book	0.87
Price Earnings Ratio	7.63
Price To FCF	-8.73
Price To sales	1.05
EV / EBITDA	8.12

2. Transcript Summary

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3. NewsRoom

Calculating The Intrinsic Value Of Algoma Central Corporation (TSE:ALC)

Nov -21

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Exploring 3 Undervalued Small Caps In Global With Insider Buying

Nov -05

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Algoma Central (TSX:ALC) Margin Expansion Reinforces Bullish Valuation Narrative

Nov -05

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Algoma Central Q3 Earnings Fall Despite Rise in Revenue; Declares Quarterly Dividend

Nov -04

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Algoma Central Corporation Reports Financial Results for the 2025 Third Quarter

Nov -04

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Algoma Central Reaches 100th Vessel Milestone

Sep -26

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Algoma Central Corporation Celebrates 100th Vessel Milestone

Sep -26

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3 Promising Undervalued Small Caps With Insider Action In Global Markets

Sep -23

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.74%)

6. Segments

Domestic Dry-Bulk

Expected Growth: 4%

Algoma Central Corporation's Domestic Dry-Bulk segment growth is driven by increasing demand for iron ore and coal transportation in the Great Lakes region, supported by infrastructure investments and a strong Canadian economy. Additionally, the company's modern fleet and operational efficiencies contribute to its growth, along with a favorable regulatory environment and growing demand for raw materials.

Ocean Self-Unloaders

Expected Growth: 3%

Algoma Central Corporation's Ocean Self-Unloaders segment growth is driven by increasing demand for dry bulk commodities, strategic fleet modernization, and expansion into new markets. Additionally, the company's focus on operational efficiency, cost savings, and customer relationships contribute to its growth. Furthermore, the rising global trade and infrastructure development also support the segment's growth.

Product Tankers

Expected Growth: 4%

Algoma Central Corporation's Product Tankers segment growth is driven by increasing demand for refined petroleum products, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on operational efficiency, modernization of its fleet, and strong relationships with customers contribute to its growth.

Corporate Segment

Expected Growth: 2%

Algoma Central Corporation's Corporate Segment growth is driven by increasing demand for marine transportation services, strategic acquisitions, and cost savings initiatives. The company's diversified revenue streams, including domestic dry bulk and product tanker operations, contribute to its growth. Additionally, investments in fleet modernization and digitalization enhance operational efficiency, further supporting growth.

7. Detailed Products

Rail Freight Services

Algoma Central Corporation provides rail freight services, offering a safe and efficient way to transport goods across Canada and the United States.

Tourist Train Journeys

The company operates tourist train journeys, offering passengers a unique travel experience through scenic routes in Ontario and Quebec.

Railcar Leasing

Algoma Central Corporation offers railcar leasing services, providing customers with access to a diverse fleet of railcars for transporting goods.

Port and Terminal Services

The company operates port and terminal facilities, offering cargo handling, storage, and transportation services.

Real Estate Development

Algoma Central Corporation engages in real estate development, managing and leasing commercial and industrial properties.

8. Algoma Central Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Algoma Central Corporation operates in the railroad industry, which has a moderate threat of substitutes. While there are alternative modes of transportation, such as trucks and ships, rail transportation remains a dominant player in the industry.

Bargaining Power Of Customers

Algoma Central Corporation's customers, primarily comprised of industrial and commercial entities, have limited bargaining power due to the company's dominant market position and limited alternatives.

Bargaining Power Of Suppliers

Algoma Central Corporation's suppliers, primarily consisting of equipment and service providers, have moderate bargaining power due to the company's dependence on these suppliers for its operations.

Threat Of New Entrants

The threat of new entrants in the railroad industry is low due to the significant barriers to entry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The railroad industry is highly competitive, with several established players competing for market share. Algoma Central Corporation faces intense rivalry from its competitors, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	32.64%
Debt Cost	6.32%
Equity Weight	67.36%
Equity Cost	7.57%
WACC	7.16%
Leverage	48.46%

11. Quality Control: Algoma Central Corporation passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Algoma Central

A-Score: 7.4/10

Value: 8.2

Growth: 4.4

Quality: 5.4

Yield: 9.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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A-Score: 6.1/10

Value: 4.7

Growth: 4.2

Quality: 5.2

Yield: 10.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

Ardmore Shipping

A-Score: 5.9/10

Value: 7.7

Growth: 8.9

Quality: 6.9

Yield: 6.0

Momentum: 0.5

Volatility: 5.7

1-Year Total Return ->

SFL Corporation

A-Score: 5.5/10

Value: 6.9

Growth: 6.0

Quality: 3.3

Yield: 10.0

Momentum: 0.5

Volatility: 6.3

1-Year Total Return ->

Pangaea Logistics Solutions

A-Score: 5.2/10

Value: 7.4

Growth: 4.1

Quality: 4.2

Yield: 9.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

Cool Company

A-Score: 4.8/10

Value: 8.2

Growth: 0.9

Quality: 4.7

Yield: 7.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

27.25%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.16%

Algoma Central Corporation - CA0156441077

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ALC

1.c. Company Highlights

Higher Yield

Less Volatile

Cheaper

Earnings Beats

Earnings Miss

Revenues Miss

Revenues Beats

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.74%)

6. Segments

Domestic Dry-Bulk

Expected Growth: 4%

Ocean Self-Unloaders

Expected Growth: 3%

Product Tankers

Expected Growth: 4%

Corporate Segment

Expected Growth: 2%

7. Detailed Products

Rail Freight Services

Tourist Train Journeys

Railcar Leasing

Port and Terminal Services

Real Estate Development

8. Algoma Central Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Algoma Central Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.99$

Current Price

18.99$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA