Focus on services lowers AtkinsRealis’s risk

Article Excerpt

Engineering company SNC-Lavalin recently changed its name to AtkinsRealis. The change is part of its new strategy, which mainly involves exiting lump-sum, turnkey (LSTK) construction projects. They expose it—and its investors—to cost overruns. The company is also narrowing its work to services such as design and consulting, instead of construction. However, AtkinsRealis still operates in a cyclical industry and remains vulnerable to a potential economic slowdown. ATKINSREALIS GROUP INC. $50 is a hold. The company (Toronto symbol ATRL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 175.3 million; Market cap: $8.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 0.2%; TSINetwork Rating: Average; www.atkinsrealis.com) has two main businesses: Engineering Services Regions (including Canada, the U.S., the U.K., Ireland, Latin America and Asia); and Nuclear (which specializes in the design and refurbishment of nuclear power plants, including its CANDU design). AtkinsRealis also owns several smaller businesses. Those include its 6.76% stake in Highway 407, a toll highway north of Toronto. The company now intends to sell that…