TSX:SJ

Stock Analysis Report

Executive Summary

Stella-Jones Inc. produces, markets, and sells pressure treated wood products in Canada and the United States.


Snowflake Analysis

Solid track record with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has Stella-Jones's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SJ's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

9.7%

SJ

0.8%

CA Forestry

4.5%

CA Market


1 Year Return

-34.7%

SJ

-52.6%

CA Forestry

-24.5%

CA Market

Return vs Industry: SJ exceeded the Canadian Forestry industry which returned -52% over the past year.

Return vs Market: SJ underperformed the Canadian Market which returned -26% over the past year.


Shareholder returns

SJIndustryMarket
7 Day9.7%0.8%4.5%
30 Day-13.5%-39.3%-20.1%
90 Day-21.4%-44.3%-24.9%
1 Year-33.8%-34.7%-51.6%-52.6%-22.0%-24.5%
3 Year-23.0%-25.4%-48.6%-52.3%-14.2%-22.2%
5 Year-20.6%-24.4%-48.4%-52.5%-1.9%-16.5%

Price Volatility Vs. Market

How volatile is Stella-Jones's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Stella-Jones undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SJ (CA$29.5) is trading below our estimate of fair value (CA$66.12)

Significantly Below Fair Value: SJ is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SJ is poor value based on its PE Ratio (12.4x) compared to the Forestry industry average (11.2x).

PE vs Market: SJ is poor value based on its PE Ratio (12.4x) compared to the Canadian market (10.6x).


Price to Earnings Growth Ratio

PEG Ratio: SJ is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: SJ is overvalued based on its PB Ratio (1.5x) compared to the CA Forestry industry average (0.7x).


Next Steps

Future Growth

How is Stella-Jones forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

6.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SJ's forecast earnings growth (6.5% per year) is above the savings rate (1.4%).

Earnings vs Market: SJ's earnings (6.5% per year) are forecast to grow slower than the Canadian market (7.5% per year).

High Growth Earnings: SJ's earnings are forecast to grow, but not significantly.

Revenue vs Market: SJ's revenue (3.1% per year) is forecast to grow slower than the Canadian market (3.9% per year).

High Growth Revenue: SJ's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SJ's Return on Equity is forecast to be low in 3 years time (12.3%).


Next Steps

Past Performance

How has Stella-Jones performed over the past 5 years?

5.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SJ has high quality earnings.

Growing Profit Margin: SJ's current net profit margins (7.5%) are higher than last year (6.5%).


Past Earnings Growth Analysis

Earnings Trend: SJ's earnings have grown by 5% per year over the past 5 years.

Accelerating Growth: SJ's earnings growth over the past year (18.5%) exceeds its 5-year average (5% per year).

Earnings vs Industry: SJ earnings growth over the past year (18.5%) exceeded the Forestry industry 4.5%.


Return on Equity

High ROE: SJ's Return on Equity (12.7%) is considered low.


Next Steps

Financial Health

How is Stella-Jones's financial position?


Financial Position Analysis

Short Term Liabilities: SJ's short term assets (CA$1.2B) exceed its short term liabilities (CA$182.1M).

Long Term Liabilities: SJ's short term assets (CA$1.2B) exceed its long term liabilities (CA$810.6M).


Debt to Equity History and Analysis

Debt Level: SJ's debt to equity ratio (47%) is considered high.

Reducing Debt: SJ's debt to equity ratio has reduced from 64.4% to 47% over the past 5 years.

Debt Coverage: SJ's debt is not well covered by operating cash flow (14.9%).

Interest Coverage: SJ's interest payments on its debt are well covered by EBIT (10.4x coverage).


Balance Sheet

Inventory Level: SJ has a high level of physical assets or inventory.

Debt Coverage by Assets: SJ's debt is covered by short term assets (assets are 2x debt).


Next Steps

Dividend

What is Stella-Jones's current dividend yield, its reliability and sustainability?

2.03%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: SJ's dividend (2.03%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.73%).

High Dividend: SJ's dividend (2.03%) is low compared to the top 25% of dividend payers in the Canadian market (8.76%).


Stability and Growth of Payments

Stable Dividend: SJ's dividends per share have been stable in the past 10 years.

Growing Dividend: SJ's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (23.6%), SJ's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SJ's dividends in 3 years are forecast to be well covered by earnings (23.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure


CEO

Éric Vachon (51yo)

0.42

Tenure

CA$636,380

Compensation

Mr. Éric Vachon, CPA, CA, has been President, Chief Executive Officer and Director at Stella-Jones Inc., since October 11, 2019 and served as Interim Chief Financial Officer until January 13, 2020. He had  ...


CEO Compensation Analysis

Compensation vs Market: Éric's total compensation ($USD452.18K) is below average for companies of similar size in the Canadian market ($USD2.50M).

Compensation vs Earnings: Éric's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Éric Vachon
CEO, President & Director0.42yrCA$636.38k0.0028% CA$56.3k
Ian Jones
Senior Vice-President7.25yrsCA$781.15k0.0036% CA$71.5k
Silvana Travaglini
Senior VP & CFO0.17yrno datano data
Gordon Murray
VP of Environment & Technology and GM of Atlantic Regionno datano datano data
Marla Eichenbaum
VP, General Counsel & Secretary21.58yrsCA$263.53k0.016% CA$315.3k
Sylvain Couture
Vice-Presidentno datano data0.0089% CA$176.7k
Patrick Stark
Vice President Environment Health and Safetyno datano data0.0012% CA$23.9k

3.8yrs

Average Tenure

Experienced Management: SJ's management team is considered experienced (3.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Éric Vachon
CEO, President & Director0.42yrCA$636.38k0.0028% CA$56.3k
James Manzi
Independent Director4.83yrsCA$92.50k0.0074% CA$147.5k
Robert Coallier
Independent Corporate Director0.17yrno data0.012% CA$232.3k
Katherine Lehman
Independent Chairman of the Board1.42yrsCA$101.98k0.0081% CA$162.2k
Douglas Muzyka
Independent Corporate Director0.25yrno datano data
Karen Laflamme
Corporate Independent Director1.25yrsCA$7.71k0.0059% CA$118.0k
Mary Webster
Corporate Independent Director12.83yrsCA$92.50k0.032% CA$642.5k
Simon Pelletier
Lead Directorno dataCA$92.50k0.0074% CA$147.5k

1.3yrs

Average Tenure

57yo

Average Age

Experienced Board: SJ's board of directors are not considered experienced ( 1.3 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SJ insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Stella-Jones Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Stella-Jones Inc.
  • Ticker: SJ
  • Exchange: TSX
  • Founded: 1992
  • Industry: Forest Products
  • Sector: Materials
  • Market Cap: CA$1.990b
  • Shares outstanding: 67.47m
  • Website: https://www.stella-jones.com

Number of Employees


Location

  • Stella-Jones Inc.
  • 3100 de la Côte-Vertu Boulevard
  • Suite 300
  • Saint-Laurent
  • Quebec
  • H4R 2J8
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SJTSX (The Toronto Stock Exchange)YesCommon SharesCACADJun 1994
STLJ.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJun 1994
97SDB (Deutsche Boerse AG)YesCommon SharesDEEURJun 1994

Biography

Stella-Jones Inc. produces, markets, and sells pressure treated wood products in Canada and the United States. It offers railway ties and timbers for railroad operators; and 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 timbers, foundation and marine pilings; and construction timbers. In addition, it offers wood preservative creosote products that are used in wood treating activities; and coal tar based products. The company was founded in 1992 and is headquartered in Saint-Laurent, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/31 01:55
End of Day Share Price2020/03/30 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.