Monday, August 29, 2011

Stantec Inc 2

I own this stock (TSX-STN, NYSE-STN). I have very few non-dividend paying stocks and this is one of them. It is classed as an industrial stock and as with lots of industrial stocks; this one has been losing money for me, especially with this latest market downturn. I bought this stock in April 2008 and so far have lost at the rate of 7% per year.

I notice that Stantec is buying back shares, but this seems to have had minimal effect on number of shares outstanding. The Insider Trading report shows some $1.3M in insider selling, a minimal amount. The insider selling is mostly by directors. There is no insider buying, but the CEO seems to be retaining his share options. Institutional Holders hold some 88% of the shares of this company. Over the past 3 months they have increased their shares by 2.8%.

I get 5 year low median Price/Earnings Ratio of 15.52 and a 5 year high median P/E Ratio of 25.29. The current P/E Ratios of 10.54 would point to a rather low current stock price. Even the Trailing P/E of 11.68 points to a rather low stock price. I get a Graham Price of $26.91. The current stock price of $23.83 is some 11% lower. The stock price on this stock is not often below the Graham Price. However, the median low difference between Graham Price and stock price is the stock price lower by 2.3%.

I get a 10 year median Price/Book Value Ratio of 2.53 and a current one of 1.67. The current one is only 66% of the 10 year median ratio. This also point to a rather low current stock price. Since these stock’s high for this year at $30.00, this stock has fallen some 20% during the recent volatility in the stock market.

When I look at the analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Buy (but it is close to a Strong Buy). Buy recommendations come with 12 month stock prices between $32 and $35. A number of analysts remark that this company mainly works in North America. It is a diversified engineering group that takes on very little in the way of construction. This company is considered to be of medium risk.

I plan to hold on to this stock for now. However, at some point I will sell as it does not pay dividends.

Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. 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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