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1. Company Snapshot

1.a. Company Description

Saputo Inc.produces, markets, and distributes dairy products in Canada, the United States, Argentina, Australia, and the United Kingdom.The company offers cheeses, including mozzarella and cheddar; specialty cheeses, such as ricotta, provolone, blue, parmesan, goat cheese, feta, romano, and havarti; fine cheeses comprising brie and camembert; and other cheeses that include brick, colby, farmer, munster, monterey jack, fresh curd, and processed cheeses.


It also provides fluid milk, yogurt, sour cream, cottage cheese, and ice cream mixes, as well as other dairy and non-dairy products, which comprise butter, cream and creamers, aerosol whipped toppings, whipping cream, dips, spread, oil, flavored coffee whitener, and iced coffee.In addition, the company offers dairy ingredients and nutritional products, including milk powder, casein, whey powder, lactose, lactoferrin, infant formula, and whey protein concentrates; and distributes fine imported cheese to specialty stores, as well as dairy and non-dairy products manufactured by third parties.It serves customers in the retail, foodservice, and industrial segments.


The company sells its products under the Saputo, Alexis de Portneuf, Armstrong, Bari, Cogruet, DuVillage 1860, Kingsey, Shepherd Gourmet Dairy, Stella, Woolwich Goat Dairy, Cathedral City, Clover, Country Life, Davidstow, Frylight, Wensleydale Creamery, Vitalite, Sheese, Dairyland, Neilson, Nutrilait, Baxter, Scotsburn, Trutaste, Milk2Go/Lait's Go, Joyya, Baileys, Heluva Good, CHEER, Cracker Barrel, Devondale, Fred Walker, Great Ocean Road, King Island Dairy, Liddells, Mersey Valley, Mil Lel, Murray Goulburn Ingredients, Warrnambool, South Cape, Sungold, Tasmanian Heritage, La Paulina, Molfino, Ricrem, Black Creek, Frigo Cheese Heads, Gardenia, Great Midwest, King's Choice, Lugano, Montchevre, Organic Creamery, Salemville, Treasure Cave, DairyStar, and Friendship Dairies brands.Saputo Inc.was founded in 1954 and is headquartered in Montreal, Canada.

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1.b. Last Insights on SAP

Saputo Inc.'s recent performance was negatively driven by weak earnings, particularly in the second quarter of fiscal 2025. Despite beating revenue expectations, the company's earnings per share (EPS) lagged behind, citing market challenges and economic pressures in key markets. The company's net earnings were impacted by higher costs, which offset the revenue growth. Additionally, the company's dividend affirmation of CA$0.19 per share in November 2024 may not be enough to offset the concerns surrounding the company's earnings.

1.c. Company Highlights

2. Saputo's Q2 2026 Earnings: Strong Execution and Margin Expansion

Saputo Inc.'s second-quarter 2026 financial results showcased a solid performance across sectors, driven by stronger commercial execution, improved efficiency, and cost optimization, leading to meaningful margin expansion. Consolidated revenues were $4.7 billion, similar to last year, while adjusted EBITDA amounted to $450 million, 16% higher than last year. Net earnings for the second quarter totaled $185 million, with adjusted EPS at $0.48 per share, a 30% increase from last year, beating analyst estimates of $0.473.

Publication Date: Nov -13

📋 Highlights
  • Financial Performance:: Consolidated revenues of $4.7 billion, adjusted EBITDA up 16% to $450 million, and net earnings of $185 million with adjusted EPS rising 30% to $0.48.
  • Canada Sector Strength:: Revenue grew 6% to $1.4 billion, adjusted EBITDA rose 11% to $179 million (13% margin), driven by retail, foodservice, and industrial sales volumes.
  • U.S. Sector Resilience:: Revenue fell 3% due to dairy pricing, but adjusted EBITDA surged 15% to $167 million via higher selling prices and operational efficiencies.
  • Strategic Investments:: Cold storage facility in Caledonia expected to reduce logistics costs, with $200 million total capital investment benefits anticipated (50% realized to date).
  • International Margin Expansion:: Argentina and Australia improved margins through pricing and higher-margin sales, while leveraging forward contracts to manage dairy price volatility.

Segment Performance

The Canada sector reported revenues of $1.4 billion, a 6% increase from last year, driven by strong sales volume across retail, foodservice, and industrial market segments. Adjusted EBITDA for Canada totaled $179 million, up 11% with margins at 13%. In the U.S. sector, revenues were $2.2 billion, 3% lower than last year, due to lower U.S. dairy commodity market pricing. However, higher selling prices and increased sales volume contributed positively to revenue.

Operational Efficiencies and Strategic Initiatives

Carl Colizza, President and Chief Executive Officer, emphasized the strength of Saputo's diversified platform and the effectiveness of its strategic initiatives and sharp execution. The company is executing on key initiatives, such as the new cold storage distribution facility in Caledonia, which will unlock further efficiencies and lower third-party logistics costs. The team is also focusing on driving volume growth, improving operational efficiencies, and managing costs in the U.S. sector.

Valuation and Outlook

With a P/E Ratio of -101.58 and an EV/EBITDA of 12.58, the market is pricing in a certain level of growth and profitability. Saputo's dividend yield of 2.06% and free cash flow yield of 5.48% are also attractive. The company expects continued benefits from stronger commercial performance, improved operational efficiency, and sharp focus on cash generation. As Carl Colizza stated, "We are confident in the dairy category and our ability to capture long-term value for shareholders while continuing to meet the evolving needs of customers worldwide."

Growth Prospects and Risks

Saputo is exploring acquisitions in the North American sector, focusing on brands and adjacencies that align with its commercial strategy. The company is also investing in its operations and efficiency, ensuring it remains competitive. However, the dairy market is subject to commodity volatility, and Saputo's ability to insulate itself against this volatility through investments in branded products and cost control will be crucial.

3. NewsRoom

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Saputo Price Target Raised to $49 at TD

Nov -28

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Saputo Inc. Announces the Renewal of its Normal Course Issuer Bid

Nov -14

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Saputo Reports Financial Results for the Second Quarter of Fiscal 2026 Ended September 30, 2025

Nov -06

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Saputo Inc.: Fiscal 2026 Second Quarter Results

Oct -16

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Saputo Insiders Added CA$59.3m Of Stock To Their Holdings

Oct -02

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Those who invested in Saputo (TSE:SAP) a year ago are up 19%

Sep -09

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Saputo Cheese to close Suamico manufacturing plant by end of Decembr, laying off 240

Sep -06

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Saputo Outperform Rating Confirmed and Target Raised at National Bank on Q1 Results

Aug -11

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.05%)

6. Segments

Retail

Expected Growth: 1.2%

Saputo Inc.'s retail segment growth of 1.2% is driven by increasing demand for dairy products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, product diversification, and cost savings initiatives contribute to its growth. Furthermore, the rise of e-commerce and online shopping platforms also supports the segment's growth.

Foodservice

Expected Growth: 0.8%

Saputo's Foodservice segment growth of 0.8% is driven by increasing demand for dairy products in the food-away-from-home market, expansion of existing customer relationships, and strategic acquisitions. Additionally, the company's focus on innovation, quality, and customer service has enabled it to maintain market share and capitalize on emerging trends in the foodservice industry.

Industrial

Expected Growth: 1.1%

Saputo Inc.'s Industrial segment growth of 1.1% is driven by increasing demand for dairy products in foodservice and industrial applications, as well as the company's efforts to expand its product offerings and improve operational efficiency. Additionally, strategic acquisitions and investments in new technologies have contributed to the segment's growth.

7. Detailed Products

Cheese

Saputo offers a wide range of cheese products, including mozzarella, cheddar, feta, and more, for both retail and foodservice customers.

Fluid Milk

Saputo produces and distributes a variety of fluid milk products, including whole, 2%, skim, and organic milk, as well as flavored and lactose-free milk.

Yogurt

Saputo offers a range of yogurt products, including Greek yogurt, Icelandic yogurt, and kefir, in various flavors and sizes.

Butter and Cream

Saputo produces and distributes butter and cream products, including salted and unsalted butter, and heavy cream and whipping cream.

Snacking Cheese

Saputo offers a range of snacking cheese products, including string cheese, mozzarella sticks, and cheese cubes.

Nutrition and Ingredients

Saputo provides a range of nutritional products and ingredients, including whey protein, lactose, and milk powder.

8. Saputo Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Saputo Inc. operates in the dairy industry, where substitutes are limited. However, consumers may opt for non-dairy alternatives, posing a moderate threat.

Bargaining Power Of Customers

Saputo Inc. has a diverse customer base, including retailers, wholesalers, and foodservice companies. This diversification reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Saputo Inc. relies on a network of dairy farmers and suppliers for its raw materials. While there are some large suppliers, the company's scale and diversification mitigate the bargaining power of suppliers.

Threat Of New Entrants

The dairy industry has significant barriers to entry, including high capital requirements, regulatory hurdles, and established distribution networks. This limits the threat of new entrants.

Intensity Of Rivalry

The dairy industry is highly competitive, with several large players competing for market share. Saputo Inc. must continually innovate and improve its operations to maintain its position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.14%
Debt Cost 3.95%
Equity Weight 63.86%
Equity Cost 5.55%
WACC 4.97%
Leverage 56.58%

11. Quality Control: Saputo Inc. passed 3 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

Stock-Card
Saputo

A-Score: 5.9/10

Value: 6.3

Growth: 3.6

Quality: 3.5

Yield: 4.0

Momentum: 8.5

Volatility: 9.7

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Lancaster Colony

A-Score: 5.7/10

Value: 3.6

Growth: 5.9

Quality: 7.1

Yield: 4.0

Momentum: 4.0

Volatility: 9.3

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J&J Snack Foods

A-Score: 5.1/10

Value: 5.1

Growth: 5.0

Quality: 5.8

Yield: 6.0

Momentum: 0.5

Volatility: 8.3

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Smucker

A-Score: 5.0/10

Value: 7.3

Growth: 2.7

Quality: 3.0

Yield: 7.0

Momentum: 2.5

Volatility: 7.7

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Simply Good Foods

A-Score: 4.2/10

Value: 5.6

Growth: 5.4

Quality: 6.6

Yield: 0.0

Momentum: 1.0

Volatility: 6.7

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BellRing Brands

A-Score: 3.1/10

Value: 5.4

Growth: 2.7

Quality: 6.1

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

38.89$

Current Price

38.89$

Potential

-0.00%

Expected Cash-Flows