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Transcontinental Inc. (TSE:TCL.A)
:TCL.A
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Transcontinental
(TSX:TCL.A)
67Neutral
Positive Factors
Business Diversification
The company has taken meaningful steps to diversify its business away from declining printing markets.
Financial Performance
The company declared a special dividend of $1/share, reflecting positive financial performance.
Negative Factors
Demand Trends
Approximately 25-35% of EBITDA still has declining demand trends due to the secular decline of printing markets.
Transcontinental (TCL.A) vs. S&P 500 (SPY)
Market Cap
C$1.43B
Dividend Yield5.23%
Average Volume (3M)312.36K
Price to Earnings (P/E)12.2
Beta (1Y)1.08
Revenue Growth-4.34%
EPS Growth42.86%
CountryCA
Employees7,500
SectorConsumer Cyclical
Sector Strength50
IndustryContainers & Packaging
Share Statistics
EPS (TTM)1.42
Shares Outstanding74,112,650
10 Day Avg. Volume200,011
30 Day Avg. Volume312,357
Financial Highlights & Ratios
PEG Ratio0.29
Price to Book (P/B)N/A
Price to Sales (P/S)0.51
Price to Cash Flow (P/CF)3.70
P/FCF Ratio4.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$22.25Price Target Upside29.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Transcontinental Business Overview & Revenue Model
Company DescriptionTranscontinental, or TC Transcontinental, is a Canadian printer and flexible packaging provider that operates in three segments: packaging, printing, and other. Its packaging segment features the production of different plastic products geared toward consumer goods. Production plants specialize in extrusion, lamination, printing, and converting. The company offers premedia, printing, and distribution services through the printing segment. Publishers, retailers, cataloguers, and marketers are some of the customers who tap TC Transcontinental for these printing solutions. The smaller other segment focuses on the media sector, which generates revenue from print and digital publishing products.
How the Company Makes MoneyTranscontinental 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 demonstrates a balanced financial profile with stable profitability, a strong balance sheet, and robust cash flows. While revenue has faced some pressure, the company maintains healthy margins and cash generation capabilities. Moderate leverage and strong equity support contribute to financial stability.Income Statement
Transcontinental's income statement shows stable profitability with a Gross Profit Margin of 48.98% and a Net Profit Margin of 4.31% for the latest period. There has been a decline in revenue of 4.35% compared to the previous year. The company maintains an EBIT Margin of 7.45% and an EBITDA Margin of 14.80%, which are reasonable but reflect some pressure on operating profitability.65
Positive
Balance Sheet
The balance sheet is solid, with a Debt-to-Equity Ratio of 0.52 indicating moderate leverage, and a Return on Equity (ROE) of 6.35% showing adequate returns. The Equity Ratio is 52.45%, reflecting strong equity backing. Overall, the balance sheet demonstrates good financial stability with manageable debt levels.70
Positive
Cash Flow
Cash flow analysis reveals robust cash generation with an Operating Cash Flow to Net Income Ratio of 3.41, indicating efficient conversion of income to cash. Free Cash Flow has slightly decreased, but overall cash flow metrics suggest strong liquidity and financial flexibility.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.81B | 2.94B | 2.96B | 2.64B | 2.57B | Gross Profit |
| 1.38B | 457.30M | 1.32B | 1.24B | 1.25B | EBIT |
| 209.50M | 164.70M | 217.30M | 233.80M | 241.40M | EBITDA |
| 416.30M | 391.70M | 446.00M | 450.00M | 479.60M | Net Income Common Stockholders |
| 121.30M | 85.80M | 141.20M | 130.60M | 131.70M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 185.20M | 137.00M | 45.70M | 231.10M | 241.00M | Total Assets |
| 3.64B | 3.70B | 3.80B | 3.61B | 3.60B | Total Debt |
| 989.00M | 1.06B | 1.15B | 1.13B | 1.17B | Net Debt |
| 803.80M | 921.00M | 1.10B | 894.80M | 933.90M | Total Liabilities |
| 1.73B | 1.79B | 1.92B | 1.85B | 1.86B | Stockholders Equity |
| 1.91B | 1.90B | 1.88B | 1.76B | 1.73B |
| Cash Flow | Free Cash Flow | |||
| 292.20M | 294.80M | 78.40M | 177.00M | 329.50M | Operating Cash Flow |
| 413.70M | 472.30M | 220.80M | 315.30M | 427.00M | Investing Cash Flow |
| -112.60M | -165.20M | -257.40M | -181.00M | 126.40M | Financing Cash Flow |
| -258.00M | -216.30M | -150.90M | -150.10M | -526.40M |
Transcontinental Technical Analysis
Positive
17.21
Price Trends
17.79
Positive
17.52
Positive
16.51
Positive
Market Momentum
-0.12
Negative
60.78
Neutral
49.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TCL.A, the sentiment is Positive. The current price of 17.21 is below the 20-day moving average (MA) of 17.33, below the 50-day MA of 17.79, and above the 200-day MA of 16.51, indicating a bullish trend. The MACD of -0.12 indicates Negative momentum. The RSI at 60.78 is Neutral, neither overbought nor oversold. The STOCH value of 49.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TCL.A.
Transcontinental Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.55B | 15.01 | 17.16% | 1.72% | 8.95% | 64.88% | |
71 Outperform | C$2.33B | 11.75 | 11.45% | 0.42% | 0.56% | 4.94% | |
67 Neutral | C$1.43B | 12.22 | 6.37% | 5.23% | -4.34% | 42.86% | |
61 Neutral | C$1.92B | 22.65 | 9.36% | 1.73% | 2.49% | -22.94% | |
61 Neutral | C$1.04B | ― | -1.80% | 4.97% | 1.36% | 59.36% | |
59 Neutral | $12.41B | 10.34 | 1.32% | 3.61% | 1.65% | -18.04% | |
50 Neutral | C$788.79M | ― | -18.73% | ― | -8.81% | -13.99% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:TCL.A
Transcontinental
18.40
4.14
29.03%
TSE:IFP
Interfor
15.28
-5.03
-24.77%
TSE:CAS
Cascades
10.28
1.19
13.12%
TSE:CCL.B
CCL Industries
71.35
0.60
0.85%
TSE:RCH
Richelieu Hardware
35.19
-7.49
-17.55%
TSE:WPK
Winpak Limited
38.15
-0.27
-0.70%
Transcontinental Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: 4.05% | Next Earnings Date: Jun 4, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed outlook. While the company demonstrated strong financial management through EBITDA growth, reduced debt, and successful cost-cutting measures, there were significant challenges with declining revenues in key sectors and potential impacts from tariffs. The special dividend indicates confidence in financial resilience despite current headwinds.Highlights
Adjusted EBITDA Growth
Despite challenges, the company delivered a strong quarter with consolidated adjusted EBITDA of $97.5 million, which grew by $1.4 million from the previous year.
Reduction in Net Debt Ratio
The net debt ratio was reduced to 1.53 times, the lowest since the acquisition of Coveris Americas in 2018, following the sale of the industrial packaging business.
Cost Reduction Success
The company maintained a 15.2% EBITDA margin in the Packaging sector due to continued cost reduction efforts, despite a decrease in revenue.
Special Dividend Announcement
A special dividend of $1 per share was announced, reflecting confidence in the company's strong financial position.
Lowlights
Revenue Decline in Packaging Sector
The Packaging sector experienced a 2.2% revenue decrease to $389.4 million due to the sale of industrial packaging activities and lower volumes in Latin America and the medical market.
Impact of Canada Post Labor Conflict
The labor conflict at Canada Post negatively impacted Retail Services and Printing activities, resulting in additional costs of $3 million.
Revenue Decline in Retail Services and Printing
Revenues in this sector decreased by 9.2% to $240.7 million, mainly due to lower volumes in traditional printing activities.
Potential Impact of Tariffs
The company faces potential impacts from tariffs with approximately 10% of combined sales exposed, creating uncertainty despite mitigation efforts.
Company Guidance
During the TC Transcontinental First Quarter Fiscal Year 2025 Results Conference Call, the company reported a 5.5% decrease in revenues from the same quarter last year, mainly due to lower volume and the sale of industrial packaging activities. Despite these challenges, adjusted EBITDA increased by $1.4 million to $97.5 million, and adjusted earnings per share improved by 14% to $0.49. The Packaging sector saw a revenue decline of 2.2%, with adjusted EBITDA decreasing by 2.3% to $59 million, maintaining a 15.2% EBITDA margin due to cost reduction efforts. The Retail Services and Printing sector experienced a 9.2% revenue decline but achieved a 6.1% increase in adjusted EBITDA to $41.9 million, marking the third consecutive quarter of profitability improvement. Net debt ratio improved to 1.53 times, and the company announced a special dividend of $1 per share, underscoring its strong financial position. The company remains focused on mitigating potential tariff impacts and expects volume and profit growth in the second half of the year, particularly in Latin America and the medical market.Transcontinental Corporate Events
Executive/Board ChangesShareholder Meetings
Transcontinental Inc. Announces Successful Election of Directors
Positive
Mar 11, 2025
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.
DividendsBusiness Operations and StrategyFinancial Disclosures
Transcontinental Inc. Reports Strong Q1 2025 Results Amid Strategic Initiatives
Positive
Mar 11, 2025
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.
Business Operations and Strategy
TC Transcontinental and Capinabel Finalize Share Monetization Termination
Neutral
Jan 20, 2025
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.
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.