STANTEC INC. $31.42 - Toronto symbol STN

STANTEC INC. $31.42 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 93.8 million; Market cap: $2.9 billion; Dividend yield: 1.3%) (all figures adjusted for a 2-for-1 share split in November 2014) sells a range of consulting, project-delivery, design and technology services. Its clients operate in a variety of industries, including oil and gas, transportation and construction.

In the three months ended December 31, 2014, Stantec’s revenue rose 15.1%, to $519.6 million from $451.3 million. Earnings gained 6.7%, to $38.1 million, or $0.41 a share, from $35.7 million, or $0.38.

The company continues to grow through acquisitions. One of its latest is Sparling, a 130-person design firm with offices in Seattle, Portland and San Diego. Sparling focuses on electrical engineering and lighting design, and its recent contracts include the University of California San Diego Jacobs Medical Center and Amazon.com’s Seattle South Union Campus.

Stantec cuts its costs by sharing administrative expenses, financing and employee benefits among its divisions. But continually buying new firms (it has made 22 acquisitions over the last three years) adds risk, including the risk of writedowns.

Stantec is a hold.

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