Canadian packaging firm Transcontinental Q3 revenue beats expectations

Overview

• Transcontinental Inc Q3 revenue falls 2.2% yr/yr, but beats analyst expectations, per LSEG data

• Adjusted EPS for Q3 beats estimates, rising 16.7% yr/yr

Outlook

• Transcontinental expects organic growth in Packaging Sector earnings for fiscal 2025

• Company anticipates higher earnings growth in Retail Services and Printing Sector

• Transcontinental plans significant cash flow generation to reduce net indebtedness

• Company's investments in flexible packaging to drive long-term growth

Result Drivers

• PACKAGING SECTOR DECLINE - Revenue decreased due to sale of industrial packaging operations and weaker demand, impacting the Packaging Sector

• RETAIL SERVICES GROWTH - Retail Services and Printing Sector saw a 4.5% revenue increase, driven by book printing activities

• COST REDUCTION - Improved adjusted operating earnings margin in Packaging Sector due to cost reduction initiatives and favorable exchange rate

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the non-paper containers & packaging peer group is "buy"

• Wall Street's median 12-month price target for Transcontinental Inc is C$24.00, about 15.5% above its September 3 closing price of C$20.27

• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 8 three months ago

Press Release: ID:nGNX4X3MvH