Friday, August 26, 2011
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 or the stock is down by 22%.
The growth figures for the financial year ending in December 2010 are good. Recently, analysts seemed to have lowered a bit the revenue expectations, but not earnings or cash flow expectations. The only growth rate that is not good is the 5 year total yearly return rate. The stock is only up about 7% per year over the past 5 years.
For example, revenue per share has grown over the past 5 and 10 year at the rate of 19% and 15% per year, respectively. Analysts expect lower total revenue for 2011, but then expect these revenues to go back up in 2012. At this point, I would not hold too much faith in 2012 estimates because we really do not know where the US and world economy is going.
In 2010 the Earnings per Share (EPS) increased by some 67%. EPS had grown over the past 5 and 10 years at the rate of 15.5% and 18% per year, respectively. Earnings are expected to grow around 10 to 11% in 2011 and grow around 12% in 2012. So far this year this company has earnings within analysts’ estimate range and earnings has been at consensus level.
Cash flow has grown over the last 5 and 10 years at 14.5% and 8% per year respectively and adjusted Cash Flow has grown at 18% and 10% per year, respectively. Adjusted cash flow excludes changes in current assets and liabilities (or working capital) in the calculation Cash Flow from operations. Many analysts look at the adjusted operational cash flow rather than just the operational cash flow.
Growth in Book Value and Return on Equity has also been good on this stock. The 5 and 10 year growth in Book Value is 10% and 17% per year, respectively. The ROE at the end of 2010 is 15%. For the 12 months ending June 2011 it is a bit higher at 15.8%. The 5 year median ROE is 15%.
Now, I shall go on to talk about the Debt Ratios. The Liquidity Ratio has generally been good. Currently it is at 1.73 and this is higher than the 5 year average of 1.52. The Asset/Liability Ratio is also good and has always been good. It is currently at 1.95 and the 5 year median is 1.95. The current Leverage Ratio at 2.05 is fine and is a bit higher than the 5 year median of 1.99. The Debt/Equity Ratio is also fine at 2.05 and it is also a bit higher than the 5 year median of 0.99.
I plan to hold on to my shares for a while longer. I did not investment much in this stock and I will eventually sell as this stock as it is not a dividend paying stock.
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.