One-glance verdict
Undervalued
$192.11 our estimate vs market $67.53
Wall Street consensus: $87.56 (-54.4% lower than our fair-value estimate)
65% below our estimate, below the bear case
Fundamentals snapshot
Stella-Jones Inc.
SJ.TO · TOR · Basic Materials · Lumber & Wood Production
Current price
$67.53
52-week range
$66.70 - $101.31
Market cap
$3.68B
Balance sheet
Watch
7.07x Adequate
Net debt $1.51B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 0.7% last year.
- Reward Returns 12.4% on equity, ahead of 66% of its peers.
- Risk Net debt grew 44.2% over 3 years.
- Risk Stock trades 8.7% above its 5-year average P/E.
What this company does
Stella-Jones Inc.
Stella-Jones makes and sells essential, specially treated wood products, primarily the utility poles that hold up power lines and the wooden ties that go under railway tracks. The company makes most of its money from large, stable customers like utility and railroad companies that constantly need these products for maintenance, which can create very steady business. They also sell treated lumber to retailers for home projects like decks and fences, giving them another way to earn money.
How the company got here
Stella-Jones was founded in 1992 in Canada and has grown significantly by acquiring other companies in the wood treatment industry. A key part of its history involves expanding from a Canadian company into a major North American player, which started with its first U.S. acquisition in 2005. Over the years, it has completed more than 20 acquisitions, allowing it to become a leader in providing essential wood products for critical infrastructure. This strategy of buying other companies has helped it grow its network of facilities and product offerings across the continent.
What it actually does
Stella-Jones takes wood and treats it with preservatives to make it last longer and resist damage from insects and weather. Think of the big wooden poles that hold up electrical wires or the wooden beams that railroad tracks rest on; Stella-Jones makes those. They also produce treated lumber that you might see used for decks and fences at home improvement stores. The company's main job is to turn regular timber into specialized, durable components for big infrastructure projects and outdoor construction.
Pressure-Treated Wood
This is the company's largest and most important business, making up the vast majority of its sales. This segment is broken down into a few key product areas. They sell pressure-treated wood utility poles to electrical and telecommunications companies, which is their biggest product category. They also supply railway ties (the wooden beams under train tracks) to major railroad operators. Another part of this segment is selling residential lumber for things like decks and fences to retailers, and industrial products for construction and marine uses.
Logs and Lumber
This is a smaller part of Stella-Jones' business that helps them make the most of their wood supply. When the company harvests or buys logs, some aren't suitable for making into their main products like utility poles. Instead of wasting this wood, they sell these logs to other buyers. Similarly, if they buy more lumber than they need for their residential treatment business, they sell the excess to local home-building markets.
What management is betting on now
The company is focused on growing its core infrastructure businesses, particularly utility poles and railway ties, which are needed for maintenance and upgrades. They are also expanding into steel products, like lattice towers for electrical transmission, to offer more to their existing customers. A key part of their strategy is to continue acquiring other companies that fit well with their business. Management is also investing in making their operations more efficient and is focused on increasing their earnings per share (EPS), which is a measure of the company's profit relative to the number of its shares.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $192.11 vs current price $67.53
Wall Street consensus is the average analyst price target: $87.56 (-54.4% lower than our fair-value estimate).
Our most-likely fair value is $192.11 a share — about 184.5% above today's price of $67.53, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $1.5B. Interest coverage 7.1x.
Net debt
$1.51B
Interest coverage
7.07x
Stella-Jones Inc.'s profit covers its interest bill about 7.1 times over.
Watch
Worse cushion
Baseline
Better cushion
SJ.TO
BASELINE
Stella-Jones Inc.
Total debt $1.65B Interest coverage 7.07x This is the baseline the peer rows are being compared against.
Total debt $1.00B Interest coverage 3.32x -53% vs SJ.TO Carries about 2.1x less debt cushion than SJ.TO.
Total debt $408.40M Interest coverage 33.62x +375% vs SJ.TO Carries about 4.8x more debt cushion than SJ.TO.
Total debt $549.25M Interest coverage 8.39x +19% vs SJ.TO Carries about 1.2x more debt cushion than SJ.TO.
Total debt $377.00M Interest coverage 18.50x +162% vs SJ.TO Carries about 2.6x more debt cushion than SJ.TO.
What you should know
The case for and against SJ.TO
3 Rewards
3 Risks
Rewards
-
Revenue grew 0.7% last year.
-
Returns 12.4% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Net debt grew 44.2% over 3 years.
-
Stock trades 8.7% above its 5-year average P/E.
-
Insider ownership is only 0.1% (peer median: 2.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
14.31x
Forward P/E
11.06x
P/B
1.69x
P/S
1.05x
EV/EBITDA
10.01x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
19.1%
Operating margin
12.2%
Net margin
7.4%
ROE
12.4%
ROA
6.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.75x
Current ratio
5.25x
Quick ratio
1.36x
Total debt
$1.65B
Total cash
$138.00M
Growth
How the business has been compounding
Revenue TTM
$3.52B
Revenue 5Y CAGR
4.4%
EPS TTM
4.72
EPS 5Y CAGR
15.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$557.00M
Free CF TTM
$445.00M
FCF margin
12.6%
Dividend
Shareholder payout
Yield
2.0%
Payout ratio
27.5%
Last ex-div date
2026-09-03