Wednesday, December 24, 2014

Stantec Inc. 2

On my other blog I am today writing about the 10 Best Canadian Stocks of the past decade continue...

I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN). I bought and sold this stock between 2008 and 2011 and did not make any money. It was a non-core holding and this is why I sold it. With their new policy of dividends, this stock because more interesting.

In insider trading, there is some $2M of insider selling and net insider selling of $1.8M. This is a small amount relative to the market of this stock. There is a bit of insider buying. There is insider ownership with the CEO owning shares worth around $10.9M and the chairman owning shares worth around $19.8M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.38, 17.66 and 22.95. The 10 year corresponding P/E Ratios are similar at 14.63, 17.21 and 21.63. The current P/E Ratio is at 17.73 based on a stock price of $31.74 and 2014 EPS estimate of $1.79. The 2015 P/E Ratio is 15.26 based on a stock price of $31.74 and 2015EPS estimate of $2.08. This suggests that the stock price is relatively reasonable.

The 2014 EPS estimate is certainly reasonable. If you look at the 12 months to the end of the third quarter, the EPS is $1.87. This is higher than the EPS estimate for the year. If you use earnings for the past 12 months the P/E Ratio is 16.97. This also suggests that the current stock price is relatively reasonable.

I get a Graham Price of $21.14. The 10 year low, median and high median P/GP Ratios are 1.11, 1.38 and 1.63. The current P/GP Ratio is 1.50. This stock price test suggests that the stock price is still relatively reasonable.

The 10 year median Price/Book Value per Share Ratio is 2.24. The current P/B Ratio is 2.86 based on a stock price of $31.74 and BVPS $11.09. The current P/B Ratio is some 28% higher than the median P/B Ratio. This testing suggests that the stock price is relatively expensive.

I cannot do any testing on the dividend yield as they have just started to pay dividends. However, I can look at Price/Cash Flow per Share Ratio. The 10 year median P/CF Ratio is 10.83 and the current P/CF Ratio is 13.01 based on a stock price of $31.74 and CFPS 2014 estimate of $2.44. The current P/CF is some 23% higher than the 10 years median P/CF and this suggests that the stock is relatively expensive.

If you look at the CFPS for the 12 month period to the end of the third quarter you get a P/CF Ratio of 13.00 and this is still almost 23% higher than the 10 year median P/CF Ratio. This still suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendations would be a Buy. The 12 month consensus stock price is $38.90. This implies a total return of 23.72% with 1.17% from dividends and 22.56% from capital gains.

According to Benzinga Michael Gaugler of Brean Capital initiated coverage of this stock. Gaugler believes that Stantec will deliver solid earnings growth. Another article talks about a joint venture of Stantec with Atkins.

Sound bit for Twitter and StockTwits is: Stock price is reasonable based on P/E Ratio. See my spreadsheet at stn.htm.

This is the second of two parts. The first part was posted on Tuesday, December 23, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.


  1. Part 1 of your discussion on Stantec is not posted.

  2. You are correct. For some reason I forgot to post it. Since this post was finished on Tuesday, I will post it now.