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    Stella Jones (TSX:SJ) Could Be 23% Undervalued After Its Q2 Miss

    Simply Wall St·09/15/2026 12:25:09
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    Stella-Jones Q2 miss puts temporary costs in focus

    Stella-Jones (TSX:SJ) missed its Q2 2026 revenue and profit forecasts after one-off environmental, maintenance, and fuel expenses, as well as higher spending tied to a steel-structure capacity expansion.

    Management kept longer-term margin targets unchanged and projected margin improvement in the second half of 2026, describing the recent cost pressures as short term rather than a reset of the underlying business model.

    Stella-Jones shares closed at CA$68.46, with the stock falling 7.6% on a 30-day share price return and 16.7% over 90 days, while the 5-year total shareholder return of 71.4% contrasts with a 12.7% decline over the past year. This suggests recent momentum has faded after a strong multi-year run.

    Compare Stella-Jones with other seasoned compounders and pressure-treated wood peers by scanning our hand-picked 3 high quality undervalued stocks that may be drawing fresh attention after recent pullbacks.

    Stella-Jones now trades well below its recent highs after the Q2 miss, with some investors seeing temporary noise and others waiting for a deeper reset. How does the current price compare with the fundamentals?

    Most Popular Narrative: 23% Undervalued

    On the widely followed narrative, Stella-Jones screens as undervalued, with a fair value of about CA$88.56 against the recent close of CA$68.46 using a 7.27% discount rate. That framework leans heavily on long-term infrastructure demand and the shift into higher value utility and transmission products.

    The North American infrastructure renewal cycle and grid modernization efforts are expected to drive sustained long-term demand for utility poles and transmission structures, which are core offerings for Stella-Jones. This is described as supporting reliable revenue growth and resilient order books. Aging infrastructure in both the U.S. and Canada is cited as a reason for persistent underlying replacement needs for utility poles and railway ties, and management repeatedly affirmed a visible, improving volume trend well into 2026, indicating stable or growing sales regardless of short-term softness.

    See why 27 investors see Stella-Jones as 23% undervalued.

    Result: Fair Value of CA$88.56 (UNDERVALUED)

    Still, the Stella-Jones story could shift if steel and composite poles displace more wood demand, or if tighter environmental rules squeeze treatment costs and margins.

    Find out about the key risks to this Stella-Jones narrative.

    Next Steps

    Sentiment around Stella-Jones is mixed right now, with both concern and optimism competing for attention. Consider moving quickly and test the thesis against your own checklist by reviewing the full breakdown of 4 key rewards and 1 important warning sign

    Looking for more investment ideas beyond Stella-Jones?

    If Stella-Jones has sharpened your thinking, do not stop here. Broaden your watchlist now and give yourself more than one way to be right.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.