snc lavalin

BCE INC., $35.90, Toronto symbol BCE, continues to profit from recent upgrades to its wireless and high-speed Internet networks. As a result, BCE’s earnings rose 11.9% in 2010, to $2.2 billion from $1.9 billion in 2009. The company spent $500 million on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 13.6%, to $2.84 from $2.50. These figures exclude costs related to a restructuring plan, which included cutting jobs, relocating employees and selling excess real estate. The latest earnings also beat the consensus estimate of $2.83 a share. Revenue rose 1.9% in 2010, to $18.1 billion from $17.7 billion. Wireline revenue (which accounts for 57% of BCE’s total revenue) rose just 0.3%. New high-speed Internet and satellite-TV subscribers offset lower local and long-distance telephone revenue. At the end of 2010, the company had 2.1 million high-speed Internet subscribers (up 2.0% from a year earlier) and 2.0 million TV subscribers (up 3.7%)....

PLEASE NOTE: Next week, Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets, will reveal its #1 pick for 2011. If you’re not already a Wall Street Stock Forecaster subscriber, click here to learn how you can get one month — including the Wall Street Stock Forecaster Stock of the Year —FREE. ENCANA CORP., $32.00, Toronto symbol ECA, is selling its natural-gas processing plant in Colorado, as well as five pipelines that pump gas into this plant. Encana will receive $303 million when the sale closes by March 31, 2011 (all amounts except share price in U.S. dollars). To put this figure in context, the company earned $98 million, or $0.13 a share, in the three months ended September 30, 2010. The company did not say what it plans to do with the cash....

SNC-LAVALIN GROUP INC. $60 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $9.1 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.1%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. SNC designs and builds large-scale public-works projects, such as roads, bridges, transit systems and water-treatment plants. It also builds mines, chemical plants and electrical-power systems. The company is working on projects in over 100 countries, but it gets about 55% of its revenue from Canada. Concession projects, such as roads and airports, are a growing part of SNC’s business. (Concessions are rights granted by governments to run public facilities.) Right now, concessions account for about 15% of SNC’s earnings.

407 is an underappreciated asset

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SNC-LAVALIN GROUP INC. $56 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $8.5 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.2%; TSINetwork Rating: Average; www.snclavalin.com) has paid $37 million for an undisclosed stake in a private company that is building a toll highway in India. This is a small deal for SNC, which earned $128.2 million, or $0.84 a share, in the three months ended September 30, 2010. However, SNC has expertise in this area through its 16.77% stake in Ontario’s 407 toll highway. That will help make the Indian project more profitable, and cut its risk. SNC-Lavalin is a buy.

SNC-LAVALIN GROUP INC., $52.10, Toronto symbol SNC, has cancelled its plan to increase its stake in Highway 407, a 108-kilometre toll highway north of Toronto. The company owns 16.77% of the 407. Earlier this month, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of the 407. However, SNC said it would exercise its right of first refusal and buy the shares from Ferrovial. That would have increased SNC’s stake in the 407 to 26.77%....

SNC-LAVALIN GROUP INC., $52.78, Toronto symbol SNC, is a leading Canadian engineering and construction company. SNC also owns 16.77% of Highway 407, a 108-kilometre toll highway north of Toronto. This week, the Canadian Pension Plan Investment Board (CPPIB) agreed to buy 10% of Highway 407 from the highway’s main shareholder, Ferrovial S.A. of Spain. Ferrovial currently owns 53% of 407. CPPIB agreed to pay $894.3 million for 10% of the 407. However, SNC intends to exercise its right of first refusal and buy these shares from Ferrovial. That will raise SNC’s stake in the highway to 26.77%....

SNC-LAVALIN GROUP INC. $52 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.9 million; Market cap: $7.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; SI Rating: Average) has formed an alliance with Alusa Engenharia Ltda, a leading engineering firm in Brazil. Together, the two companies plan to bid on new infrastructure projects in Brazil, which is hosting the 2014 FIFA World Cup and the 2016 Summer Olympics. To support these events, the country plans to upgrade its roads, airports, stadiums and electrical grids. SNC has operated in Brazil for 40 years. Its long history in the country and its new partnership with Alusa improve its chances of winning new contracts. Meanwhile, spending on public-works projects in Canada and other countries is likely to speed up as the economy recovers....

CGI GROUP INC., $14.70, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. This week, the company reported earnings that matched the consensus estimate. But an unexpected revenue drop caused stock to fall 10%. In its third quarter, which ended June 30, 2010, CGI earned $85.9 million. That’s up 12.0% from $76.7 million a year earlier. Earnings per share rose 20.0%, to $0.30 from $0.25, on fewer shares outstanding....

In response to the BP oil spill in the Gulf of Mexico, regulators will probably require offshore drillers to install more equipment aimed at preventing future spills. These extra costs would hurt the profits of companies that are active in the Gulf. That should spur more development of less-risky onshore oil and natural-gas deposits, particularly Canada’s oil sands.

Safety, falling costs could drive producers back to the land

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PENGROWTH ENERGY TRUST, $9.76, Toronto symbol PGF.UN, has agreed to buy the 82% of Monterey Exploration Ltd. (Toronto symbol MXL) that it doesn’t already own. The deal should close in September 2010. Monterey produces oil and natural gas at properties in Alberta and British Columbia. Pengrowth is particularly interested in Monterey’s unconventional gas holdings in northeastern B.C. Monterey lacks the financial resources to develop these assets. That’s why it accepted Pengrowth’s offer. The trust will pay $366 million in units to take full control of Monterey. That includes $30 million of Monterey’s debt, which Pengrowth will assume....