Earnings Miss: Stella-Jones Inc. Missed EPS By 20% And Analysts Are Revising Their Forecasts

Stella-Jones Inc. (TSE:SJ) just released its latest quarterly report and things are not looking great. Results showed a clear earnings miss, with CA$915m revenue coming in 9.3% lower than what the analystsexpected. Statutory earnings per share (EPS) of CA$1.42 missed the mark badly, arriving some 20% below what was expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Stella-Jones after the latest results.

See our latest analysis for Stella-Jones

Taking into account the latest results, the consensus forecast from Stella-Jones' eight analysts is for revenues of CA$3.62b in 2025. This reflects an okay 5.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be CA$5.78, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of CA$3.87b and earnings per share (EPS) of CA$6.62 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to CA$88.13. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Stella-Jones, with the most bullish analyst valuing it at CA$95.00 and the most bearish at CA$81.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Stella-Jones is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stella-Jones' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Stella-Jones' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.4% growth on an annualised basis. This is compared to a historical growth rate of 9.3% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% annually. So it's pretty clear that, while Stella-Jones' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Stella-Jones' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Stella-Jones going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Stella-Jones (1 doesn't sit too well with us!) that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.