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New inflation data shows prices rose more than expected in September, led in part by record diesel prices. For a company like Stella-Jones that operates a massive logistics network to transport heavy utility poles and railway ties, higher fuel costs directly eat into profit margins.
While the company has a strong position in the infrastructure market, these rising costs are difficult to avoid. If inflation stays high, it also increases the chance that interest rates will stay elevated, which typically keeps the housing market soft and limits demand for the company's residential lumber products.
Source: Market Watch
Management has missed its own profit targets for three straight quarters. This suggests the business is cooling faster than leaders expected as they struggle to forecast through a housing slump.
| Expectation | |
|---|---|
| EPS | $1.12 |
| Revenue | $709M |