$SJ.TO

CIBC Confirms Neutral Rating on Stella-Jones and Cuts Target to $87 On Q1 Results

CIBC Capital Markets maintained its neutral rating on the shares of Stella-Jones (SJ.TO) and lowered its price target to C$87.00 from C$96.00 on modestly lower estimates and a 0.5x decrease in the bank's EV/EBITDA valuation multiple due to increased concerns around medium- to long-term rail tie demand, it said after the company reported first quarter results on Wednesday.The company's expansion into steel utility structures in Spring 2025 continues to progress well, and its vision of becoming a multi-material supplier to the utility and railway sectors provides additional growth vectors, the bank added."That being said, we moved to the sidelines on the name six months ago on concerns of increased competition in SJ's core markets amid elevated wood pole prices (SJ's price/mix has risen 55% since 2021), and ongoing rail sector M&A and tie capex tightening initiatives among Class 1s," said analyst Hamir Patel.CIBC reduced its Q2 EBITDA estimate by $3 million to $191 million primarily on slightly softer pole pricing assumptions and more cautious Residential Lumber and Industrial Products assumptions. Its 2026 EBITDA is now expected to be flat at $623 million, and 2027 EBITDA up 4% to $647 million.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)Price: $76.10, Change: $-0.91, Percent Change: -1.18%

Stella-Jones Q1 Net Income Falls, Misses Analysts' Expectations

Stella-Jones (SJ.TO) reported a decrease in net income in the first quarter even as revenue increased year-over-year.For the three months ended March 31, 2026, the company reported net income of $60 million or adjusted earnings per basic and diluted share of $1.12, compared with $93 million or $1.15 EPS, a year earlier. The result missed a consensus estimate compiled by FactSet of $1.13 EPS.Sales increased to $791 million in the quarter, compared with $773 million, a year-ago, but missed a consensus estimate compiled by FactSet of $811.4 million."We are pleased with the strong performance of Utility Products, driven by sustained demand for wood utility poles, as we successfully execute on our secured contractual commitments," said Stella-Jones Chief Executive Eric Vachon.Its board also declared a quarterly dividend of $0.34 per common share, unchanged from the prior quarter, payable on June 19, to shareholders of record at the close of business on June 2.Shares of the company closed up 2.5% to $83.50 on Tuesday on the Toronto Stock Exchange.

Earnings Flash (SJ.TO) Stella-Jones Posts Q1 Adjusted EPS Basic and Diluted $1.12 per Share, vs.$1.15 a Year Earlier

Earnings Flash (SJ.TO) Stella-Jones Reported Q1 Revenue $791.0M, vs. $773 Million a Year Earlier

CIBC Provides its Q1/26 Forestry, Building Products & Packaging Preview

CIBC Capital Markets on Tuesday provided its "Q1/26 Forestry, Building Products & Packaging Preview" and said that heading into first quarter earnings season, it remains cautious on wood/building product equities as elevated mortgage rates are "likely to continue weighing on demand".It further said that while there was a level of optimism from some industry participants going into the key spring selling season, which kicked off in early February, there has been "little indication of a material pickup in demand"."Moreover, the onset of the conflict in the Middle East has further eroded consumer confidence, which was accompanied by a spike in mortgage rates (currently sitting ~30 bps higher than pre-war levels at 6.3%), further adding to homebuyer affordability challenges," said CIBCCIBC also said that it sees added inflationary pressures, including freight, diesel and resins, for several companies under its coverage, posing downside risk to Q2 consensus estimates."That being said, Canadian lumber companies should see moderating duties in the back half of the year, with the preliminary AR7 combined AD/CV "All Others" rate of 24.83% announced (vs. the current rate of 35.16%)," added CIBC.CIBC also said that CCL Industries (CCL-B.TO) remains its top pick across its Forestry, Building Products & Packaging coverage universe, given the difficult housing backdrop weighing on wood/building product equities.CIBC believes CCL's diversified global platform and end-market exposure should support "steady top-line growth over the cycle," supported by continued RFID growth and benefits from recent business wins and capital projects."With leverage of only 0.8x, CCL is well positioned to be opportunistic with M&A, buybacks and organic investments," added CIBC.It further said that, among its Paper & Packaging names, it also rates Transcontinental (TCL-A.TO) outperformer given the company's "strong FCF generation, margin improvement initiatives and further M&A prospects".Across its broader housing-related coverage, CIBC said it has an outperformer rating on ADENTRA (ADEN.TO) and Weyerhaeuser (WY)."While wood product prices have moved higher, our channel checks indicate that consensus estimates for wood products companies may be overly optimistic for the first quarter," said CIBC. "Further out, consensus still looks overly aggressive on most wood names for 2026/2027 given elevated mortgage rates, weak consumer confidence and potentially higher cost inflation."CIBC added that its largest adjustments are for Canfor (CFP.TO), West Fraser Timber (WFG.TO) and WY, where for the next two years, CIBC is reducing estimates by an average of 20%/12%, leaving its revised estimates for 2026/2027 approximately 26%/10% lower than consensus.CIBC lowered its price targets on Canfor from C$16 to C$15, Mercer International (MERC) from US$2.00 to US$1.75, Stella-Jones (SJ.TO) from C$102 to C$96, and West Fraser from C$108 to C$102, "largely reflecting weaker commodity price estimates.""While our expected total return for Mercer is notably higher, given limited share price liquidity and greater volatility in MERC's share price, we believe a much higher return is necessary on the micro-cap pulp equity to warrant a more constructive rating," added CIBC.CIBC increased its price targets on ADENTRA from C$42 to C$44 and Doman Building Materials Group (DBM.TO) from C$11.00 to C$11.50, "reflecting higher valuation multiples given continued M&A activity in the distributor space."CIBC said that it is also raising its price target on CCL from C$102 to C$103, on "improved confidence in the company's ability to quickly pass through rising input costs."Price: $86.25, Change: $-0.35, Percent Change: -0.40%

RBC Changes Estimates for Canadian Trucking and Diversified Industrials

RBC Capital Markets outlined Monday estimate changes for Canadian trucking and diversified industrials equities ahead of the first-quarter earnings reporting season.RBC lowered Cargojet's (CJT.TO) price target to $140 from $143 while maintaining its outperform rating. The EBITDA estimate for the company was also decreased to $80 million from $83 million, driven by indication Canadian consumer spending on discretionary goods is pulling back.The EBITDA estimate for Mullen Group (MTL.TO) remained unchanged at $79 million while its price target increased to $19 from $17 with an outperform rating. RBC expects recent PMI readings and potential infrastructure investment to favorably affect demand and sentiment in the shares.RBC cut Stella-Jones (SJ.TO)'s price target to $93 from $95 and maintained its sector perform rating while its earnings per share estimate was reduced to $1.27 from $1.47. While RBC sees utility pole momentum continuing in 2026, RBC sees the Tie outlook as uncertain and flags risk given aggressive behavior from Stella's main competitor.Meanwhile, the EPS estimate for TFI International (TFII.TO) was unchanged at $0.65 while its price target remained at US$137 with an outperform rating. RBC said it is bullish on recent pricing trends and does not expect management to provide full year 2026 guidance given the uncertain backdrop.Westshore Terminals Investment (WTE.TO)'s price target increased to $39 from $34 while its outperform was maintained. The EBITDA estimate was also unchanged at $29 million.Price: $84.94, Change: $-0.95, Percent Change: -1.11%