SNC-LAVALIN GROUP INC. $40 - Toronto symbol SNC

SNC-LAVALIN GROUP INC. $40 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.6 million; Market cap: $6.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.5%; TSINetwork Rating: Average; www.snclavalin.com) earned $26.5 million in the second quarter of 2015, down 17.3% from $32.1 million a year earlier. Earnings per share declined 19.0%, to $0.17 from $0.21, on fewer shares outstanding.

The drop was largely because SNC ran into unstable soil while building a mass-transit project, which increased its costs. Expenses at a separate highway project were also higher than expected, further hurting its earnings.

However, revenue jumped 32.7%, to $2.25 billion from $1.7 billion, thanks to U.K.-based Kentz, which SNC bought in August 2014. Kentz provides engineering and construction services to the oil and gas industry and now supplies a third of SNC’s revenue.

The stock fell to $36.24 in March 2015 after the RCMP laid charges against SNC and some of its subsidiaries for using bribes to win construction contracts in Libya between 2001 and 2011. The company plans to fight these allegations.

Meantime, the company continues to win public works contracts, including one for building a new bridge in Montreal and another for a transit line in Toronto. SNC’s order backlog rose to $12.4 billion as of June 30, 2015, from $12.3 billion at the end of 2014.

SNC-Lavalin is still a buy.

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