Valued at a market cap of $13.76 billion, CCL Industries (TSX:CCL.B) is a Toronto-based manufacturer of labels, consumer printable media, technology-driven label solutions, polymer banknote substrates, and specialty films.
It serves global markets, including consumer packaging, healthcare, automotive, and retail. The company’s business segments include the following:
- CCL, which converts pressure-sensitive materials for decorative and functional applications;
- Avery, which provides digital printing solutions;
- Checkpoint, which develops RFID (radio-frequency identification) loss prevention systems; and
- Innovia, which supplies specialized polypropylene films.
Founded in 1951, CCL operates across North America, South America, Europe, Asia, Australia, the Middle East, Africa, and New Zealand. After adjusting for dividend reinvestments, the TSX stock has returned close to 5,000% to shareholders in the last three decades. Even if we narrow the investment horizon, CCL stock has beaten the broader markets in the past decade, with returns of almost 200%.
So, let’s see if CCL stock remains a top investment choice in May 2025.
Is CCL Industries stock a good buy?
CCL Industries delivered strong first-quarter results, posting record adjusted earnings per share of $1.18, up from $1.08 in the prior year. Revenue increased 8.6% to $1.89 billion, driven by 3.8% organic growth, acquisitions, and favourable foreign exchange translation.
Operating income rose 9% to $316.9 million, excluding currency impacts, with the CCL segment leading performance through 4.5% organic growth. The segment benefited from double-digit growth in Latin America and strong profitability gains in the Home & Personal Care and CCL Design divisions, though Food & Beverage margins declined slightly.
The Innovia segment delivered one of its best quarters in recent years, achieving strong volume growth and market share gains, particularly in North America. CCL disclosed plans to start its new German facility for low-gauge label films this quarter, though startup costs will impact near-term results.
Management addressed tariff concerns, emphasizing that most of CCL’s business operates on local production for local demand, limiting direct exposure. However, the company faces uncertainty around its Avery segment’s back-to-school season, with a potential $10 million EBIT (earnings before interest and tax) impact from retailer hesitation amid tariff confusion.
Due to reduced capital expenditures, free cash flow improved to $39.1 million in the first quarter compared to a $7 million outflow in the prior year. The company also returned $156.3 million to shareholders through dividends and share buybacks.
CCL’s global footprint advantageously positions it as customers reconsider their supply chains. Despite ongoing trade policy uncertainties, management noted April as potentially one of the company’s best months ever.
Is the TSX dividend stock undervalued?
Analysts expect CCL’s revenue to increase from $7.25 billion in 2024 to $7.91 billion in 2028. Comparatively, adjusted earnings are forecast to expand from $4.32 per share to $6.48 per share in this period.
A widening earnings base should also translate to consistent dividend hikes. CCL has raised its annual dividend from $0.40 per share in 2016 to $1.16 per share in 2024. Analysts expect free cash flow to increase to $770 million this year, up from $602 million in 2024.
Given its outstanding share count, CCL’s dividend expense will range around $225 million this year, indicating a payout ratio of just 30%. Analysts expect the TSX dividend stock to raise its dividends to $1.42 per share in 2026.
Today, the TSX stock trades at a trailing price-to-earnings multiple of 16 times, which is below its 10-year average of 22 times. If CCL is priced at 19 times trailing earnings, it will trade around $123 in May 2029, indicating an upside potential of almost 60% from current levels.
