Friday, June 18, 2010

Stantec Inc

I bought this stock (TSX-STN) in April 2008. I have lost some 4.7% per year on this stock. This is a small non dividend paying stock that is into infrastructure. I like to invest in a few odd non-dividend paying stocks for fun.

This is a solid growth company and the only current problem I see is the lack of growth in Cash Flow from operations over the past 5 years. This growth was only at 1.3% per year. This is rather low. However, the 10 year growth in cash flow is much better at 25% per year. One of the good things about this stock is the good growth in revenue. The revenue growth per share over the past 5 and 10 years has been 19% per and 16% per year respectively. The Revenue growth has been higher at 23% and 22% per year respectively. The difference between the revenue growth and the revenue growth per share is because the company has issued shares to cover acquisitions.

The growth in earnings per share is also good, with the 5 and 10 year growth rates of 9% and 15% per year, respectively. We have yet to fully recover from the last recession, but the 5 and 10 year growth in returns on this stock has been very good at 18% and 27% per year, respectively. I see no problem with the long term growth in this company and this is why I will hold my shares. Although, I must admit I do not have much invested in this stock for the simple reasons it is not a dividend paying stock.

The stock has a fairly strong balance sheet with Liquidity Ratio of 1.62 after the 1st quarter of 2010 and an Asset/Liability Ratio of 1.98 after this same quarter. The Leverage Ratio is just 2.05. The Return on Equity is also good at around 10% for last year and for this first quarter of 2010. The 5 year average is a bit higher at 11%. The Accrual Ratio is very high at 12%, and the problem is that the cash flow was negative for the first quarter. However, it was also negative for the first quarter of 2009, so this should not be a problem.

I like this stock and I will continue to follow it and hold what shares I have. On Monday, I will review the stock price, connected ratios, and also look at what analysts say about this stock.

Stantec Inc is a profitable Construction & Engineering company that trades on the TSX. It provides professional services in planning, engineering, architecture, interior design, landscape architecture, surveying and geomatics, environmental sciences project management and project economics for clients, from initial concept and financial feasibility, to project completion and beyond. They work in North America, the Caribbean, United Kingdom, Australia, and New Zealand. Its web site is here Stantec. See my spreadsheet at stn.htm.

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 for stocks followed and investment notes. Follow me on twitter.

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