Stella-Jones Inc (SJ) posted solid first-quarter results fueled by record lumber pricing. The producer and marketer of pressure-treated wood products saw a strong rise in sales, EBITDA, and net income.
Stella-Jones’s sales came in at C$623 million for the quarter ended March 31, an increase of 23% from C$508 million in the prior-year quarter.
Meanwhile, EBITDA rose 57% in 1Q, from C$63 million to C$99 million. For the first quarter of 2021, the net income was C$56 million (C$0.85 per share), double the net income of C$28 million (C$0.41 per share) posted in the same quarter in 2020. (See Stella-Jones Inc stock analysis on TipRanks.)
Stella-Jones’ President and CEO Éric Vachon said, “We had an exceptionally robust start to the year, continuing our momentum of growth. Our first-quarter performance was fueled by record pricing and volume gains in the residential lumber product category, solid utility poles results, and strong railway ties demand tempered by pricing pressures in certain markets. EBITDA grew by 57% to an all-time first-quarter high of $99 million, and net income doubled to $56 million compared to the same period last year.”
Stella-Jones has raised its EBITDA guidance. The company now aims to generate EBITDA in the range of C$450 million and C$480 million in 2021, up from the previously disclosed guidance of C$385 million to C$410 million.
Last month, RBC Capital analyst Walter Spracklin maintained a Buy rating on the stock with a price target of C$56.00 (6.4% upside potential).
The rest of the Street is cautiously optimistic about SJ with a Moderate Buy rating based on 4 Buys and 2 Holds. The average analyst price target of C$56.91 implies an upside potential of approximately 8% from current levels. Shares have jumped by more than 10% year-to-date.
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