Transcontinental (TCL.A) AI Stock Analysis

• Market Cap: C$1.44B
• Dividend Yield: 5.19%
• Average Volume (3M): 430.09K
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.88
• Revenue Growth: -4.75%
• EPS Growth: 68.04%
• Country: CA
• Employees: 7,400
• Sector: Consumer Cyclical
• Sector Strength: 55
• Industry: Specialty Business Services
• EPS (TTM): 1.92
• Shares Outstanding: 74,112,650
• 10 Day Avg. Volume: 900,074
• 30 Day Avg. Volume: 430,092
• PEG Ratio: 0.13
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.54
• Price to Cash Flow (P/CF): 3.90
• P/FCF Ratio: 4.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$22.33
• Price Target Upside: 33.87% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

Transcontinental's overall score of 71 reflects a stable financial position with strengths in cash flow and dividend yield. While there are challenges in revenue growth, the company's strategic management and solid valuation provide a balanced outlook. Technical indicators support the stock's positive trend, while earnings call insights underline effective cost management despite external pressures.

Positive Factors

Earnings

Retail Services & Printing adjusted EBITDA was above forecast, with lower volumes more than offset by cost reductions.

Financial Performance

The company declared a special dividend of $1/share, reflecting positive financial performance.

Negative Factors

Market Demand

Approximately 25-35% of EBITDA still has declining demand trends due to the secular decline of printing markets.

Operational Challenges

The Canada Post strike is expected to weigh on adjusted EBITDA, with an impact of about $1 million per week.

Transcontinental Business Overview & Revenue Model

Company Description

Transcontinental Inc. (TCL.A) is a Canadian company that operates primarily in the packaging, printing, and media sectors. It is a leader in flexible packaging in North America and Canada's largest printer, as well as a publisher of community newspapers. The company's core products and services include flexible packaging solutions, marketing and printing services, and the publication of newspapers and educational resources.

How the Company Makes Money

Transcontinental Inc. generates revenue through three main segments: Packaging, Printing, and Media. The Packaging segment provides flexible packaging solutions to various industries such as food, beverage, and healthcare, which is a significant growth driver for the company. The Printing segment offers a wide range of printing services, including marketing products, periodicals, and books, primarily serving customers in Canada and the United States. This segment also includes in-store marketing solutions and pre-media services. The Media segment generates revenue through advertising and subscriptions from its portfolio of newspapers and educational publications. Strategic partnerships and acquisitions further enhance Transcontinental's capabilities and market reach, contributing to its revenue streams.

Transcontinental Financial Statement Overview

Summary

Transcontinental exhibits strong gross margins and solid cash flow generation, with a stable financial position. However, there is room for improvement in net profitability and revenue growth consistency. Leverage is under control, supporting financial stability, while cash flows remain robust, underscoring operational efficiency.

Income Statement

Transcontinental's income statement shows moderate profitability and stable revenues. The Gross Profit Margin is strong at 41.5% TTM, indicating efficient production. However, the Net Profit Margin stands at 5.9% TTM, which is relatively low, reflecting challenges in controlling bottom-line expenses. Revenue growth has been inconsistent, with a decline of 4.9% from the previous annual report. EBIT and EBITDA margins are at 9.7% and 17.3% TTM, respectively, showing reasonable operating efficiency.

Balance Sheet

The balance sheet indicates a solid equity position with an Equity Ratio of 54.3% TTM, suggesting financial stability. The Debt-to-Equity Ratio is at 0.51 TTM, indicating manageable leverage levels. Return on Equity is moderate at 8.3% TTM, pointing to efficient use of equity but also room for improvement in generating higher returns for shareholders.

Cash Flow

Transcontinental's cash flow statement shows a robust operational cash flow with an Operating Cash Flow to Net Income Ratio of 2.3 TTM, indicating strong cash generation relative to reported profits. Free Cash Flow to Net Income Ratio is also healthy at 1.7 TTM. However, Free Cash Flow has marginally declined by 6.6% compared to the previous year, hinting at slight pressures on free cash generation.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.78B	2.81B	2.94B	2.96B	2.64B	2.57B
	Gross Profit
1.15B	1.38B	457.30M	1.32B	1.24B	1.25B
	EBIT
270.40M	209.50M	164.70M	217.30M	233.80M	241.40M
	EBITDA
479.70M	416.30M	391.70M	446.00M	450.00M	479.60M
	Net Income Common Stockholders
163.00M	121.30M	85.80M	141.20M	130.60M	131.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
273.10M	185.20M	137.00M	45.70M	231.10M	241.00M
	Total Assets
3.62B	3.64B	3.70B	3.80B	3.61B	3.60B
	Total Debt
994.20M	989.00M	1.06B	1.15B	1.13B	1.17B
	Net Debt
721.10M	803.80M	921.00M	1.10B	894.80M	933.90M
	Total Liabilities
1.65B	1.73B	1.79B	1.92B	1.85B	1.86B
	Stockholders Equity
1.96B	1.91B	1.90B	1.88B	1.76B	1.73B
Cash Flow		Free Cash Flow
272.90M	292.20M	294.80M	78.40M	177.00M	329.50M
	Operating Cash Flow
379.90M	413.70M	472.30M	220.80M	315.30M	427.00M
	Investing Cash Flow
32.60M	-112.60M	-165.20M	-257.40M	-181.00M	126.40M
	Financing Cash Flow
-198.90M	-258.00M	-216.30M	-150.90M	-150.10M	-526.40M

Transcontinental Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 16.68
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TCL.A, the sentiment is Negative. The current price of 16.68 is below the 20-day moving average (MA) of 17.20, below the 50-day MA of 16.75, and above the 200-day MA of 15.90, indicating a neutral trend. The MACD of 0.27 indicates Negative momentum. The RSI at 58.85 is Neutral, neither overbought nor oversold. The STOCH value of 61.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TCL.A.

Transcontinental Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCL.A	71 Outperform	C$1.44B	9.05	8.50%	5.19%	-4.75%	68.04%
WPK	71 Outperform	C$2.44B	12.29	11.45%	0.40%	0.56%	4.94%
CCL.B	70 Outperform	$12.01B	14.45	17.16%	1.77%	8.95%	64.88%
RCH	70 Outperform	C$2.00B	23.54	9.36%	1.67%	2.49%	-22.94%
CAS	60 Neutral	$974.59M	―	-1.80%	5.06%	1.36%	59.36%
Sector *	59 Neutral	$11.76B	10.11	-0.70%	3.92%	1.27%	-16.30%
IFP	50 Neutral	$742.48M	―	-18.73%	―	-8.81%	-13.99%

Transcontinental Corporate Events

Transcontinental Inc. Announces Successful Election of Directors

Transcontinental Inc. announced the successful election of all proposed directors at its Annual Meeting of Shareholders, with each candidate receiving a majority of votes. This outcome reflects strong shareholder support and is likely to reinforce the company’s strategic direction and governance, potentially impacting its operations and stakeholder relations positively.

Transcontinental Inc. Reports Strong Q1 2025 Results Amid Strategic Initiatives

Transcontinental Inc. reported strong financial results for the first quarter of fiscal 2025, with revenues of $643 million and net earnings of $55.6 million. The company improved its net indebtedness ratio and declared a special dividend, reflecting a solid financial position. Despite weaker demand in certain sectors, cost-reduction initiatives and growth in cheese and dairy packaging helped maintain profitability. The Retail Services and Printing Sector saw a 6.1% increase in adjusted operating earnings, aided by a favorable product mix and increased book printing activities.

TC Transcontinental and Capinabel Finalize Share Monetization Termination

TC Transcontinental and Capinabel have completed a significant transaction to terminate the monetization of 3,950,000 Class B Shares held by Capinabel, marking a strategic reorganization phase. This transaction, which involves a corporate reorganization, does not negatively impact TC Transcontinental economically or tax-wise, and Capinabel has borne all associated costs. The reorganization results in Capinabel holding 91.67% of the Class B Shares and 65.86% of the voting rights in the company, thereby maintaining its strong influence over TC Transcontinental’s governance.