Monday, December 28, 2015

Stantec Inc. 2

On my other blog I am today writing about Dividend Paying Stocks learn more...

Sound bite for Twitter and StockTwits is: Stock price probably reasonable. I still like this company and would consider it if I was looking for stock in connection with the construction industry. It has a solid balance sheet and starting dividends is a very positive sign. See my spreadsheet on Stantec Inc.

I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I bought this stock in April of 2008 to make some capital gains. It was a non-dividend paying stock at that point. I lot of people were recommending it as a great stock. The reason it was recommend is that it is in the infrastructure business. There are many that think this company will profit from government money promised for infrastructure building. With their new policy of dividends, this stock has become more interesting.

There is insider ownership. The CEO owns shares worth around $6.4M, the CFO owns shares worth around $2.4M and the Chairman owns shares worth around $21M. However, all this adds up to less than 1% of the outstanding shares.

They increased the outstanding shares in connection with stock options by 0.73% in 2014 (with increases of 0.64 in 2013 and 0.99% in 2012). This is relatively high. I think anything over 0.50% is high. For the stocks I track the median increase for stock options is 0.27% and 70% increase shares by 0.54% or less.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.20, 16.51 and 21.84. These are lower than the 10 year corresponding ratios of 13.48, 17.21 and 22.40. This historical median P/E Ratio is lower at 14.50. The current P/E Ratio is 18.97 based on a stock price of $34.90 and 2015 EPS of $1.84. This stock price testing suggests that the stock price is reasonable, but a bit above the median.

However, if you look at P/E Ratio for 2016, the P/E Ratio is lower at 16.31 based on a stock price of $34.90 and 2016 EPS of $2.14. The stock price testing suggests that the stock price is reasonable and just below the median.

I get a Graham Price of $23.66. The 10 years low, median and high median Price/Graham Price Ratios are 1.05, 1.36 and 1.74. The current P/GP Ratio is 1.48 based on a stock price of $34.90. This stock price testing suggests that the stock price is reasonable and just above the median. However, the Graham Price for 2016 is $25.52 and the P/GP Ratio is 1.37 which suggests that the stock price is reasonable and around the median.

I get a 10 years Price/Book Value per Share Ratio of 2.24. The current P/B Ratio is 2.58 based on a stock price of $34.90 and BVPS of $13.52. The current P/B Ratio is some 15.4% higher than the 10 year P/B Ratio. This stock price testing suggests the stock price is reasonable but above the median.

I cannot do any dividend yield testing as they only just started to pay dividends.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most are Hold recommendations, but the consensus is a Buy recommendation. The 12 month stock price consensus is $36.43. This implies a total return of 5.59% with 4.38% from capital gain and 1.20% from dividends.

Kristian Gore at WKRB talks about several analysts' recent recommendations. (Be careful with US reports on Canadian stocks as some prices are in US$ and some in CDN$, but they do not specify the currency. For example, dividends are often given in US$ as in this report.) In this article on Enterprise Leader, it says Zacks Research has given this stock a Growth Style score. This article in talks about the recent change in leadership in this company.

This is the second of two parts. The first part was posted on Thursday, December 24, 2015 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 Inc.

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.

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