Another look at SNC-Lavalin

I am taking another look at this stock as a friend was thinking of buying it. The market has changed a lot since I last looked at this stock and a June 2008 Quarterly report is now available.

The main thing that has changed is the P/E ratio. This ratio is now a much more reasonable 20.2% based on what this stock is expected to do. One reason for this change is that the expected Earnings per Share (EPS) for 2008 has gone up from about $1.90 to $2.00 and some analyst think that it will be even higher. This other change, of course, is that the stock price has come down.

The 5 year average P/E on this stock is 33.4%, so the current at 20.2% it is lower than this average. The Yield is also better than the 5 year average of .89%. It is now at 1.19%. The yield has been higher in the past, but the higher yields were all prior to 2000.

Another positive sign is that the Asset/Liability ratio is up to 1.20 from 1.17, although this is not where I would like it at 1.50 it is better. The Asset/Book Value has also come down from 6.8 to 6.3. This is better, but not great. The thing that has changed for the worse is the Accrual Ratio is now at 6.59%. Although this is less accurate between annual reports, it is not a good sign.

The calls on this stock are all over the place; some say buy, some hold and some sell. One thing that concerns me is the insider selling. Insider selling is not as accurate guide of what insiders think about a stock as insider buying. You never know why the selling is taking place. It could have nothing to do with the stock. There is also some insider buying, but this is over shadowed by the selling.

I will not be buying any more of this stock as a sold some because I had too much of it. The reason I had too much is because the stock grow a lot faster than my portfolio in general. I have done very well with this stock. I think that currently there is risk attached to buying this stock, but you might do very well if you can stand taking this risk.

See my spreadsheet at www.spbrunner.com/stocks/snc.htm. I have reloaded by spreadsheet with the figures from the June 2008 Quarterly Report.

This company is involved with engineering and construction work around the world, this includes infrastructure and buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; and mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is www.snc-lavalin.com.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.