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1. Company Snapshot

1.a. Company Description

Stella-Jones Inc.produces and markets pressure-treated wood products in Canada and the United States.It offers railway ties and timbers for railroad operators; and wood utility poles for electrical utilities and telecommunication companies.


The company also provides residential lumber and accessories to retailers for outdoor applications; industrial products, including bridge and crossing timbers, foundation and marine piling, construction timbers, crane mats, fence posts, and highway guardrail posts; and coal tar-based products.In addition, company manufactures wood preservative and creosote.Stella-Jones Inc.


was incorporation in 1992 and is headquartered in Saint-Laurent, Canada.

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1.b. Last Insights on SJ

Stella-Jones Inc.'s recent performance was negatively driven by a decline in sales, specifically a 9.5% decrease in sales to $915 million compared to $949 million in the prior year quarter. This decline was partly attributed to reduced utility pole sales. Additionally, the company's operating income decreased by $36 million year-over-year to $130 million, and net income decreased to $80 million or $1.42 per share. Despite maintaining a robust EBITDA margin of 17.7%, the company's high net debt and challenges in the utility sector have raised concerns.

1.c. Company Highlights

2. Stella-Jones' Q3 2025 Earnings: A Strong Performance

Stella-Jones reported a 2% organic sales growth in Q3 2025, driven by higher infrastructure volumes, primarily for utility poles. The company's total sales were up 5% to $960 million, including the contribution from the Locweld acquisition. EBITDA increased to $171 million, and the EBITDA margin was a solid 17.8%. The company's earnings per share (EPS) came in at $1.59, significantly beating analyst estimates of $0.907. The strong EPS was largely due to higher sales volume and better pricing in the residential lumber business.

Publication Date: Nov -08

📋 Highlights
  • Organic & Total Sales Growth:: 2% organic sales growth driven by utility poles; total sales up 5% with Locweld acquisition contribution.
  • EBITDA Performance:: EBITDA rose to $171 million (17.8% margin), up $9 million YoY from higher sales volumes.
  • Cash Flow & Share Repurchases:: $198 million operating cash flow in Q3; $454 million returned to shareholders since 2023 ($500M target).
  • Utility Pole Outlook:: Full-year growth revised to low-single-digits, offsetting weak H1 volumes with H2 momentum and contract wins.

Revenue Growth and Margin Analysis

The company's revenue growth was driven by the utility poles and residential lumber businesses. Utility poles sales benefited from new contracts secured last year and a full quarter contribution from the steel structure business. The residential lumber business saw similar quarterly volumes as last year, but with better pricing in response to higher cost of inventory. The company's EBITDA margin was maintained at 17.8%, reflecting the resilience and strength of its business.

Cash Flow and Capital Allocation

Stella-Jones generated cash from operations of $198 million in Q3 2025, compared to $186 million in Q3 2024. The company has a prudent and balanced approach to capital allocation, providing it with the financial flexibility to pursue strategic growth opportunities and return capital to shareholders. Over the last 12 months, the company generated over $500 million in cash from operations, allowing it to invest approximately $90 million in its business, acquire Locweld, and return approximately $145 million to shareholders.

Valuation and Outlook

With a P/E Ratio of 14.04 and an EV/EBITDA of 9.62, the company's valuation appears reasonable. The company's ROE is 17.09%, indicating a strong return on equity. Analysts estimate revenue growth at 6.5% for next year, and with the company's strong track record of execution, it is well-positioned to deliver on this growth. The company's guidance for the year remains intact, and it is encouraged by the progression it is seeing in its business.

3. NewsRoom

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Stella-Jones Will Hold a Conference Call to Discuss its Fourth Quarter 2025 Financial Results

Jan -22

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Is There An Opportunity With Stella-Jones Inc.'s (TSE:SJ) 27% Undervaluation?

Jan -16

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Is Stella-Jones Inc.'s (TSE:SJ) Latest Stock Performance Being Led By Its Strong Fundamentals?

Dec -30

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CIBC Says "High-cost" Lumber Producers Thrown Lifeline

Nov -27

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Stella-Jones Initiated at Raymond James at Outperform, $100 Price Target

Nov -20

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Stella-Jones Unveils 2026-2028 Financial Objectives and Outlines its Future Growth Plans

Nov -20

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Stella-Jones Inc (STLJF) Q3 2025 Earnings Call Highlights: Strong Sales Growth Amid Market ...

Nov -13

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Stella-Jones (TSX:SJ) Margin Decline Reinforces Concerns Over Slowing Earnings Growth

Nov -06

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.08%)

6. Segments

Pressure-treated Wood

Expected Growth: 5%

Stella-Jones Inc.'s pressure-treated wood segment growth is driven by increasing demand for outdoor living spaces, rising construction of decks and fences, and growing popularity of DIY projects. Additionally, the company's strategic acquisitions, expanded product offerings, and strong relationships with distributors and retailers contribute to its 5% growth.

Logs and Lumber

Expected Growth: 7%

Stella-Jones Inc.'s Logs and Lumber segment growth of 7% is driven by increasing demand for railway ties and utility poles, supported by infrastructure investments and renewable energy projects. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the growth, along with favorable weather conditions and a strong housing market.

7. Detailed Products

Railway Ties

Stella-Jones Inc. is a leading manufacturer of railway ties, providing high-quality treated wood products for the rail industry.

Utility Poles

Stella-Jones Inc. offers a range of utility poles, including transmission, distribution, and telecommunication poles, designed to meet the needs of the utility industry.

Pilings and Foundation Products

Stella-Jones Inc. manufactures pilings and foundation products, including treated wood pilings, dock pilings, and foundation systems, for marine and land-based construction projects.

Timber Bridges

Stella-Jones Inc. designs and manufactures timber bridges, offering a sustainable and durable solution for pedestrian, vehicular, and rail bridges.

Industrial Products

Stella-Jones Inc. offers a range of industrial products, including treated wood for industrial applications, such as fencing, decking, and landscaping materials.

8. Stella-Jones Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Stella-Jones Inc. is medium due to the availability of alternative products such as plastic and concrete poles.

Bargaining Power Of Customers

The bargaining power of customers for Stella-Jones Inc. is low due to the company's strong relationships with its customers and the lack of buyer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Stella-Jones Inc. is medium due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for Stella-Jones Inc. is low due to the high barriers to entry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Stella-Jones Inc. is high due to the presence of several competitors in the industry and the need to constantly innovate and improve products to stay competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.33%
Debt Cost 5.58%
Equity Weight 54.67%
Equity Cost 7.31%
WACC 6.53%
Leverage 82.93%

11. Quality Control: Stella-Jones Inc. passed 4 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
Stella-Jones

A-Score: 6.7/10

Value: 5.9

Growth: 8.1

Quality: 5.5

Yield: 4.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Navigator

A-Score: 6.2/10

Value: 6.0

Growth: 4.8

Quality: 5.7

Yield: 10.0

Momentum: 1.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
UFP Industries

A-Score: 5.3/10

Value: 6.2

Growth: 6.4

Quality: 5.8

Yield: 3.0

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

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Boise Cascade

A-Score: 5.1/10

Value: 6.9

Growth: 5.8

Quality: 5.4

Yield: 6.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Sylvamo

A-Score: 4.7/10

Value: 7.9

Growth: 3.4

Quality: 5.6

Yield: 6.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
West Fraser Timber Co

A-Score: 4.6/10

Value: 6.9

Growth: 4.1

Quality: 4.4

Yield: 3.0

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

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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

97.6$

Current Price

97.6$

Potential

-0.00%

Expected Cash-Flows