Stantec Inc (NYSE: STN)

Sector: Industrials Industry: Engineering & Construction CIK: 0001131383
Market Cap 11.19 Bn
P/B 4.78
P/E 31.93
P/S 2.44
ROIC (Qtr) 13.22
Div Yield % 0.48
Rev 1y % (Qtr) 10.22
Total Debt (Qtr) 1.96 Bn
Debt/Equity (Qtr) 0.84

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 621.30M provides strong 19.14x coverage of stock compensation 32.46M, indicating sustainable incentive practices.
  • Robust free cash flow of 583.26M exceeds capital expenditure of 38.04M by 15.33x, indicating strong organic growth funding capability.
  • Tangible assets of 3.09B provide exceptional 7.89x coverage of deferred revenue 392.32M, showing strong service capability backing.
  • Free cash flow of 583.26M provides exceptional 8.30x coverage of interest expense 70.29M, showing strong debt service ability.
  • Robust tangible asset base of 3.09B provides 6.88x coverage of working capital 449.42M, indicating strong operational backing.

Bear case

  • Operating cash flow of 621.30M barely covers its investment activities of (370.65M), with a coverage ratio of -1.68, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 621.30M provides thin coverage of dividend payments of (71.88M) with a -8.64 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 261.96M provide limited coverage of acquisition spending of (328.91M), which is -0.80x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 529.71M show weak coverage of depreciation charges of 233.12M, with a 2.27 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 583.26M represents just -4.81x of debt issuance (121.30M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical areas [axis] Breakdown of Revenue (2024)

Products and services [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Engineering & Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PWR Quanta Services, Inc. 62.71 Bn 61.60 2.31 6.02 Bn
2 FER Ferrovial SE 48.08 Bn 14.25 5.05 -
3 FIX Comfort Systems Usa Inc 35.76 Bn 42.69 4.30 0.39 Bn
4 EME EMCOR Group, Inc. 29.29 Bn 25.91 1.80 0.42 Bn
5 APG APi Group Corp 17.37 Bn 111.36 2.27 3.05 Bn
6 MTZ Mastec Inc 17.01 Bn 51.39 1.24 2.77 Bn
7 J Jacobs Solutions Inc. 16.94 Bn 58.56 1.41 2.71 Bn
8 BLD TopBuild Corp 13.35 Bn 23.52 2.55 3.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.49 1.61
EV to Cash from Ops. EV/CFO 14.08 6.94
EV to Debt EV to Debt 4.46 11.81
EV to EBIT EV/EBIT 16.52 17.80
EV to EBITDA EV/EBITDA 11.72 13.77
EV to Free Cash Flow [EV/FCF] EV/FCF 15.00 55.77
EV to Market Cap EV to Market Cap 0.78 1.20
EV to Revenue EV/Rev 1.91 1.65
Price to Book Value [P/B] P/B 4.78 5.81
Price to Earnings [P/E] P/E 31.93 35.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.53 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 15.20 25.81
Dividend per Basic Share Div per Share (Qtr) 0.47 0.24
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 6.62 4.05
Interest Coverage Int. cover (Qtr) 7.54 80.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 55.47 -166.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 35.72 637.72
Dividend Growth (1y) % Div 1y % (Qtr) -39.97 5.87
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 33.26 92.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 21.62 8.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 35.67 85.34
EBT Growth (1y) % EBT 1y % (Qtr) 45.24 42.07
EPS Growth (1y) % EPS 1y % (Qtr) 42.46 43.76
FCF Growth (1y) % FCF 1y % (Qtr) 80.61 -20.95
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 11.39 32.46
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.57 1.14
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.05
Cash Ratio Cash Ratio (Qtr) 0.16 0.38
Current Ratio Curr Ratio (Qtr) 1.27 1.55
Debt to Equity Ratio Debt/Equity (Qtr) 0.84 0.89
Interest Cover Ratio Int Coverage (Qtr) 7.54 80.15
Times Interest Earned Times Interest Earned (Qtr) 7.54 80.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 16.60 0.40
EBIT Margin % EBIT Margin % (Qtr) 15.93 -2.31
EBT Margin % EBT Margin % (Qtr) 10.01 -4.59
Gross Margin % Gross Margin % (Qtr) 54.50 20.38
Net Profit Margin % Net Margin % (Qtr) 7.60 -5.96