STANTEC INC. $32.74

STANTEC INC. $32.74 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 113.9 million; Market cap: $3.7 billion; Dividend yield: 1.4%) sells a range of consulting, project-delivery, design and technology services. Its clients operate in the oil and gas industry, transportation, construction and several other areas.

In the three months ended March 31, 2016, Stantec’s acquisitions and the stronger U.S. dollar boosted its revenue by 6.1%, to $628.8 million from $592.3 million a year earlier. However, earnings fell 19.3%, to $30.6 million, or $0.33 a share, from $38.0 million, or $0.40. That was mostly due to the cost of integrating those new businesses. As well, low commodity prices hurt the contribution of oil and gas and mining clients.

The company continues to grow through acquisitions. Its biggest is the May 2016 purchase of MWH Global for $795 million U.S. With 187 offices in 26 countries, MWH gives Stantec a major global presence in the water infrastructure industry.

By sharing administrative expenses, financing and employee benefits among its businesses, Stantec cuts its costs. But continually buying other companies—it has made 25 acquisitions over the past four years— adds risk, including the risk of writedowns.

Stantec raised its dividend by 7.1% with the April 2016 payment, to $0.1125 from $0.105. The shares yield 1.4%.

Stantec is a hold.

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