The firm’s regular string of new contracts and acquisitions should keep earnings and dividend payouts growing, as high-profile wins keep its name in front of potential new clients.
Existing operations still saw their revenue rise 11.0%, suggesting the core business is solid and expanding organically.
Meanwhile the stock trades at 21.7 times the company’s 2023 earnings forecast.
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STANTEC INC. (Toronto symbol STN; www.stantec.com) offers you exposure to this leading seller of consulting, project-delivery, design and technology services. Stantec’s clients operate in a variety of industries, including oil and gas, transportation and construction.
Stantec’s strong reputation continues to help it win new contracts. For example, the California High-Speed Rail Authority has selected the company to design an extension of the rail system from Merced to Madera, a key section between Los Angeles and San Francisco. The project involves re-routing utility infrastructure and planning the construction of 40 new structures.
The company will receive $41 million U.S. over the next two years, nearly 1% of its annual revenue of $5.3 billion (Canadian).
Stantec also uses acquisitions to spur its growth. It cuts related risk by targeting smaller firms that are easy to absorb.
Thanks to several purchases that Stantec completed in 2021 and this year, the company’s revenue in the quarter ended September 30, 2022, rose 24.3%, to $1.16 billion from $932.9 million a year earlier. If you factor out acquisitions, revenue improved 11.0%.
The company expects the combination of new contracts and acquisitions will increase its annual earnings by 11% annually. It will probably earn $3.30 a share in 2023, and the stock trades at a reasonable 21.7 times that estimate. The $0.72 dividend yields 1.0%.
Stantec last raised your quarterly dividend with the April 2022 payment. The dividend has grown at an average annual rate of 7.6% in the past five years. The stock holds an Above Average TSI Dividend Sustainability Rating.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
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TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
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Changes to this Policy
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TSI Network may revise this Policy from time to time.
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STN is a little under the radar but has been a great compounder over the last 20 years. Their acquisition strategy has created a lot of wealth during those years. I think it is an excellent bet for individual investors.
Thanks for your comment. SNL has been very successful in lowering the risk associated with growth by acquisition.