STANTEC INC. $30.90 - Toronto symbol STN

STANTEC INC. $30.90 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 45.5 million; Market cap: $1.4 billion; Dividend yield: 1.9%) sells a range of consulting, project delivery, design/build and technology services. The company’s clients operate in a wide variety of markets, including industry, environment, transportation and construction. Stantec has over 11,000 employees at 170 locations throughout North America. It also has four international offices.

In the three months ended December 31, 2011, the company’s revenue rose 12.6%, to $432.0 million from $383.7 million a year earlier. Acquisitions were part of the reason for the gains. Stantec is also working on a number of new projects. Before one-time items, earnings rose 4.3%, to $24.3 million, or $0.53 a share, from $23.3 million, or $0.51 a share.

Stantec continues to grow by acquisition. In 2011, it bought five companies. Together, these firms added 725 staff to Stantec’s workforce.

Continually buying and integrating new companies adds risk—including the risk of writedowns. However, Stantec maximizes its sales by offering its services to both new and existing clients. The company cuts its costs by sharing administrative expenses, financing and employee benefits between its divisions.

Stantec began paying dividends for the first time with a quarterly payment of $0.15 a share in April 2012. Based on today’s price, the shares will yield 1.9%.

Stantec is a buy.

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