Saputo (TSX:SAP): What to know about the dairy stock before you buy it?

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Saputo (TSX:SAP): What to know about the dairy stock before you buy it?

Saputo (TSX:SAP): What to know about the dairy stock before you buy it?
Image source: ©2022 Kalkine Media®    

Highlights 

  • Saputo Inc, a major dairy company in Canada with a market capitalization of over C$ 12 billion, has stirred notable interest among investors for a while now.
  • The Montreal-headquartered company, which has been manufacturing and marketing milk and milk-based products since 1950, went through a rough patch in 2021 amid provincial governments regulating milk prices.
  • However, some experts believe that Saputo stock has been overcorrected and is available at a bargain price.

Saputo Inc, a major dairy company in Canada with a market capitalization of over C$ 12 billion, has stirred notable interest among investors for a while now.

The Montreal, Canada-headquartered company, which has been manufacturing and marketing milk and milk-based products since year 1950, went through a rough patch in 2021 amid provincial governments regulating milk prices.

In addition, inflation has proved to be a big enemy for the milk business due to soaring input costs, which is much higher than milk prices.

However, some experts believe that Saputo stock has been overcorrected and is available at a bargain price.

So, let us glance at Saputo's stock and financial performance.

Saputo Inc (TSX: SAP) stock performance

The dairy producer and seller saw its stock tumble by almost 20 per cent in the last one year. More recently, however, SAP stock has climbed by nearly three per cent in the past one week and by roughly five per cent year-to-date (YTD).

Saputo scrips closed at C$ 29.79 apiece on Tuesday, January 11, which indicated a decline of almost 30 per cent from its 52-week high of C$ 42.42 achieved on June 3, 2021.

The dairy stock is presently one of the top consumer stocks on the TSX.

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Saputo Inc’s financial results in Q2 FY2022

The dairy processing company earned a revenue of C$ 3.68 billion in the second quarter of fiscal 2022, which up from that of C$ 3.70 billion a year ago.

Saputo Inc's adjusted EBITDA plummeted to C$ 283 million in the latest quarter, down from C$ 370 million in Q2 FY2021.

The milk manufacturing company generated net earnings of C$ 98 million in Q2 FY2021, as compared to that of C$ 171 million in the same period a year ago.

Saputo Inc’s (TSX: SAP) financial performance

 Image source: © 2022 Kalkine Media®    

Bottomline

Despite the challenging market conditions, including labour shortage, inflationary pressure and supply chain worries, Saputo Inc seems to be focused on expanding its operational footprint in 2022.

In September last year, the Canadian dairy company acquired aseptic food product manufacturer Carolina Aseptic and yogurt maker Carolina Dairy to strategically strengthen its dairy business in North Carolina, United States.

Also read: Suncor (TSX:SU) & TC Energy (TSX:TRP): 2 oil & gas stocks to buy now

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