Transcontinental, the Consumer Cyclical sector company, was revisited by a Wall Street analyst on September 5. Analyst Stephen Macleod from BMO Capital reiterated a Hold rating on the stock and has a C$23.00 price target.
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Stephen Macleod has given his Hold rating due to a combination of factors impacting Transcontinental’s performance. The company’s Q3/25 results were largely in line with expectations, showing modest growth in adjusted EBITDA and EPS. While the Retail Services & Printing segment exceeded forecasts due to strong book volumes, the Packaging segment underperformed, primarily due to lower volumes and the sale of the industrial packaging business.
Despite these mixed results, Transcontinental’s efforts to diversify away from declining printing markets are notable, though approximately 25-35% of its EBITDA is still affected by declining demand. The company has low leverage and free cash flow, providing opportunities for mergers and acquisitions, particularly in the Retail Services & Printing sector. However, the potential for a valuation re-rating is contingent on sustained improvements in return on invested capital and more modest declines in the RS&P segment.