Review of Stella-Jones Inc.

APR 17, 2025 - The company’s growth strategy through a combination of selective acquisitions and organic investment has fueled the company’s consistent topline growth for more than 20 years. The company also has a shareholder-friendly policy by committing to return capital to shareholders by at least $500 million (a 13.5% yield) compared to the market capitalization of $3.7 billion) during the period of 2023-2025, while maintaining a moderately leveraged balance sheet. The recent volatility regarding tariffs is certainly concerning for SJ in terms of revenue growth and profitability, given the company’s high exposure to the U.S. market. That being said, we think it is still early to conclude the impact tariffs would have on SJ’s business. There should be some headwinds in terms of revenue and earnings growth. However, given the company’s decent track record of operating results, we are maintaining our ratings at “A-“, but are open to changes if the state of tariffs gets worse and negatively affects the company’s operating results.