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Saputo Inc. (TSE:SAP)
TSX:SAP
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Saputo Inc.
(TSX:SAP)
56Neutral
Positive Factors
Earnings
Analysts expect the upcoming quarter to initiate a return to positive performance for Saputo Inc.
Stock Rating
The rating for Saputo Inc. has been set to BUY by financial analysts.
Strategic Developments
The U.S. is benefitting from the Global Strategic Plan, which is a positive development for the company.
Negative Factors
Commodity Volatility
U.S. dairy commodity volatility remains elevated, making it challenging to forecast earnings accurately.
Earnings Concerns
Heading into earnings, there is a belief that FQ2/25 may be a miss, adding to concerns about the company's near-term performance.
Macroeconomic Challenges
Macroeconomic challenges in Argentina have caused a lowering of estimates.
Saputo Inc. (SAP) vs. S&P 500 (SPY)
Market Cap
C$10.35B
Dividend Yield3.05%
Average Volume (3M)776.09K
Price to Earnings (P/E)42.3
Beta (1Y)0.56
Revenue Growth9.20%
EPS Growth-147.37%
CountryCA
Employees19,600
SectorConsumer Defensive
Sector Strength79
IndustryPackaged Foods
Share Statistics
EPS (TTM)-0.37
Shares Outstanding421,164,150
10 Day Avg. Volume700,570
30 Day Avg. Volume776,089
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.57
Price to Cash Flow (P/CF)7.10
P/FCF Ratio7.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$31.50Price Target Upside26.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Saputo Inc. Business Overview & Revenue Model
Company DescriptionSaputo 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.
How the Company Makes MoneySaputo Inc. generates revenue primarily through the sale of its dairy products, which include cheese, milk, and other dairy ingredients. These products are distributed to a diverse customer base, including retailers, foodservice operators, and industrial clients. The company's revenue streams are segmented geographically, with a significant portion coming from North America, supplemented by sales in Europe, Latin America, and other international markets. Saputo also benefits from strategic acquisitions that expand its product offerings and market reach, as well as partnerships with key retailers and distributors that enhance its distribution capabilities and market presence. Fluctuations in milk prices, consumer demand, and global trade policies can significantly impact the company's earnings.
Saputo Inc. Financial Statement Overview
Summary
Saputo Inc. faces challenges with profitability, reflected in declining margins and negative net income TTM. However, the company maintains a stable balance sheet with moderate leverage and a healthy equity ratio. Positive cash flow management indicates resilience in operational cash generation. Strategic improvements in operational efficiency and cost management could enhance overall financial health.Income Statement
Saputo Inc. has shown fluctuating revenue growth with a recent decline in net income leading to negative net profit margins of -0.84% TTM (Trailing-Twelve-Months). Gross profit margin is stable at 16.32% TTM, but the decline in profitability metrics such as EBIT and EBITDA margins suggests operational challenges. The company has seen a decline in revenue growth rate recently, which could indicate market pressures or internal inefficiencies.45
Neutral
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 0.52, indicating balanced leverage. Return on equity has declined to -2.26% TTM, reflecting recent net losses. However, the equity ratio of 50.48% TTM indicates a fair proportion of financing through equity, suggesting reasonable financial stability despite recent downturns.58
Neutral
Cash Flow
Saputo's cash flow statement reveals a positive free cash flow, with a growth rate of 17.69% TTM, indicating effective cash management despite operating challenges. The operating cash flow to net income ratio is strong at -7.00 TTM, highlighting operational efficiency. However, the free cash flow to net income ratio shows some strain, suggesting potential areas for improvement in profitability conversion.62
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 18.85B | 17.34B | 17.84B | 15.04B | 14.29B | 14.94B | Gross Profit |
| 3.08B | 2.52B | 5.42B | 4.68B | 4.72B | 4.76B | EBIT |
| 954.00M | 853.00M | 976.00M | 597.00M | 964.00M | 1.01B | EBITDA |
| 779.00M | 1.18B | 1.51B | 1.08B | 1.48B | 1.42B | Net Income Common Stockholders |
| -158.00M | 265.00M | 622.00M | 274.00M | 626.00M | 582.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 466.00M | 466.00M | 263.00M | 165.00M | 308.70M | 319.40M | Total Assets |
| 14.26B | 14.26B | 14.43B | 13.68B | 13.12B | 13.79B | Total Debt |
| 3.99B | 3.99B | 4.04B | 4.25B | 4.11B | 4.49B | Net Debt |
| 3.52B | 3.52B | 3.78B | 4.08B | 3.81B | 4.17B | Total Liabilities |
| 7.21B | 7.21B | 7.29B | 7.18B | 6.68B | 7.23B | Stockholders Equity |
| 7.05B | 7.05B | 7.14B | 6.50B | 6.44B | 6.56B |
| Cash Flow | Free Cash Flow | ||||
| 632.00M | 537.00M | 384.00M | 195.00M | 645.10M | 460.60M | Operating Cash Flow |
| 1.11B | 1.19B | 1.02B | 693.00M | 1.08B | 1.04B | Investing Cash Flow |
| -375.00M | -652.00M | -632.00M | -799.00M | -387.40M | -2.49B | Financing Cash Flow |
| -833.00M | -343.00M | -369.00M | -72.00M | -705.00M | 1.64B |
Saputo Inc. Technical Analysis
Negative
24.83
Price Trends
24.57
Positive
24.94
Negative
27.05
Negative
Market Momentum
0.07
Positive
46.74
Neutral
20.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SAP, the sentiment is Negative. The current price of 24.83 is below the 20-day moving average (MA) of 25.19, above the 50-day MA of 24.57, and below the 200-day MA of 27.05, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 46.74 is Neutral, neither overbought nor oversold. The STOCH value of 20.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SAP.
Saputo Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | C$21.54B | 22.75 | 13.78% | 1.41% | 1.59% | -1.98% | |
78 Outperform | C$11.28B | 17.14 | 12.64% | 1.68% | 1.05% | -6.94% | |
77 Outperform | C$66.16B | 18.58 | 18.66% | 1.03% | 11.62% | -8.08% | |
76 Outperform | C$31.80B | 24.66 | 21.04% | 1.32% | 2.47% | -7.67% | |
63 Neutral | $20.66B | 14.30 | -10.05% | 3.14% | 1.30% | 2.76% | |
56 Neutral | C$10.35B | 42.30 | -2.28% | 3.05% | 9.20% | -147.37% |
* Consumer Defensive Sector Average
Performance Comparison
TSE:SAP
Saputo Inc.
24.83
-0.66
-2.59%
LBLCF
Loblaw Companies
140.85
31.84
29.21%
TSE:ATD
Alimentation Couche-Tard Inc
70.97
-2.99
-4.04%
TSE:EMP.A
Empire Co Cl A NV
48.25
16.19
50.50%
TSE:MRU
Metro Inc.
100.07
29.54
41.88%
TSE:WN
George Weston
245.33
66.92
37.51%
Saputo Inc. Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 5.75% | Next Earnings Date: Jun 5, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. While financial performance showed positive growth in adjusted EBITDA and revenue across multiple regions, significant challenges were evident in the UK and international sectors, leading to a substantial impairment charge and a net loss. The withdrawal of long-term financial targets further emphasized market uncertainty. However, strong performances in Canada and the US, along with strategic share repurchase plans, indicate a cautiously optimistic outlook.Highlights
Strong Financial Performance and Revenue Growth
Adjusted EBITDA increased by 13% year-over-year to $417 million, marking the best quarterly performance since Q3 of fiscal 2023. Revenues increased by 17%, totaling $5 billion, driven by higher sales volumes and favorable international cheese and dairy ingredient prices.
Successful Capital Projects and Cost Savings
Capital projects delivered $30 million in savings in the US sector, with substantial long-term margin opportunities anticipated. Operational improvements and cost-saving measures contributed to performance.
Record Performance in Canada
Canadian segment saw a 17% increase in adjusted EBITDA to $175 million, driven by operational efficiencies, supply chain optimization, and higher sales volumes.
Resilient US Performance
US revenue increased by 12% to $2.3 billion, with adjusted EBITDA up 20% despite market challenges. Benefits from capital investments and productivity improvements were realized.
Positive Impact of Share Repurchase Program
Increased the total number of shares that can be repurchased under NCIB from 2% to 5% of shares outstanding, indicating confidence in the company's financial health and shareholder value.
Lowlights
Significant Impairment Charge in the UK
A non-cash goodwill and intangible asset impairment charge of $684 million was recorded in the UK division due to challenging market conditions, including inflation and high interest rates, resulting in a net loss of $518 million for the quarter.
Challenges in the International Sector
Adjusted EBITDA in the international sector declined by $34 million year-over-year, with Argentina facing higher production costs due to inflation and currency devaluation, alongside reduced milk availability.
Withdrawal of Long-term EBITDA Aspiration
Due to unstable market conditions, the company withdrew its long-term adjusted EBITDA target, highlighting ongoing volatility and uncertainty in the market.
Company Guidance
During the third quarter of fiscal 2025, Saputo, Inc. demonstrated strong financial performance amidst market volatility, achieving an adjusted EBITDA of $417 million, up 13% year-over-year. Consolidated revenues rose by 17% to $5 billion, driven by increased sales volumes and higher domestic selling prices across all sectors. The company generated $735 million in operating cash flow year-to-date, reflecting robust cash generation capabilities. Despite a $684 million non-cash impairment charge related to its UK division, Saputo reported adjusted earnings of $167 million, or $0.39 per share. The company focused on share repurchases, increasing the permissible buyback from 2% to 5% of shares outstanding, and highlighted $30 million in cost savings from capital projects in the US sector. Looking ahead, Saputo withdrew its long-term adjusted EBITDA aspiration due to unstable market conditions but remains committed to optimizing operations and capitalizing on growth opportunities.Saputo Inc. Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Saputo Inc. Sees Strong Q3 Performance Despite UK Challenges
Neutral
Feb 7, 2025
Saputo Inc. reported strong financial results for the third quarter of fiscal 2025, with a 13% year-over-year increase in adjusted EBITDA, reflecting successful strategic execution and cost control. Despite a net loss primarily due to a significant goodwill impairment charge in its UK Dairy Division, Saputo demonstrated robust revenue growth across all sectors, enhanced by operational improvements and strategic capital allocations, including an increased share buyback program.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.