Stantec Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Construction. It would seem on a number of measure that the stock price is reasonable and below the median. They have good dividend coverage with dividends low and growth moderate. 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. There are many that think this company will profit from government money promised for infrastructure building. I bought and sold this stock between 2008 and 2011 and did not make any money. It was a non-core holding. With their new policy of dividends, this stock has become more interesting.

They started to pay dividends in 2012 and dividends have grown at 10.2% per year over the past 4 years. The dividend has been low with the current dividend at 1.43 and the 5 year median at 1.25%. The dividend growth is in the median range. Dividends are growing currently at 10.2% per year.

They can afford their dividends. The Dividend Payout Ratio for 2016 is 36.3% with 5 year coverage at 41%. This is expected to be 42% this year with 5 year coverage at 36%. The DPR for CFPS is at 2% for 2016 with 5 year coverage at 3.5%. It would seem that they adequate coverage and room to grow.

The shareholders of this stock have made money over the past 5 and 10 years. The total return over these periods is 21.58% and 11.26% per year. The portion of the total return attributable to dividends is 1.85% and 0.71% per year respectively. Do not forget that dividends were only paid for the last 5 years. The portion of the total return attributable to capital gains is 19.73% and 10.55% per year respectively.

The Return on Equity for 2016 was 6.6% with 5 year median of 15.1%. The ROE for 2017 is expected to be 7.4% with 5 year median of 11.8%. The ROE on Comprehensive Income for 2016 is 6.7% with 5 year median at 19.6%. The higher ROE on Comprehensive Income suggests that the earnings for this company are of a good quality.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.38, 17.66 and 22.88. The 10 year ratios are 15.79, 20.34 and 24.12. The historical ratios are 11.60, 15.04 and 18.48. The current P/E Ratio is 30.22 based on a current stock price of $35.05 and 2017 EPS estimate of $1.16. The 2018 P/E Ratio is 17.70 based on a stock price of $35.05 and 2018 EPS estimate of $1.98. This stock price testing suggests that the stock price is relative reasonable using the 2018 number. It is a reasonable one to use as we are close to 2018.

I get a Graham Price of $20.77 for 2017 and 27.13 for 2018. The Price/Graham Price Ratios for 2017 is 1.69 and for 2018 is 1.29 based on a stock price of $35.05. The 10 year low, median and high median Price/Graham Price Ratios are 1.16, 1.47 and 1.74. Using the 2018 P/GP Ratio the current stock price is relatively reasonable and below the median.

The 10 year median Price/Book Value per Share is 2.24. The current P/B Ratio is 2.12. (Note this is from the most recent quarter so there are no 2017 and 2018 ratios here.) The current P/B Ratios is based on a Book Value of $1,882M, Book Value per Share, and a stock price of $35.05. The current P/B Ratio is some 5% below the 10 year median. This stock price testing suggests that the stock price is reasonable and below the median.

The current dividend yield is 1.43%. The historical median is 1.25%. The current dividend yield is some 14% higher than the historical median. The current dividend yield is based on dividends $0.50 and a stock price of $35.05. This stock price testing suggests that the stock price is reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.15. The 2017 P/S Ratio is 1.15 and the 2018 P/S Ratio is 1.07. The current P/S Ratio is based on Revenue of $3,484M, Revenue per Share of $30.59 and a stock price of $35.05. The 2018 P/S Ratio is based on Revenue of $3,740M, Revenue per Share of $32.84 and a stock price of $35.05. The 2017 and 2018 P/S Ratio is some 0.7% and 7% below the 10 year median ratio. This stock price testing suggests that the stock price is reasonable and below the median.

When I look at analysts' recommendations, I find Buy (5) and Hold (6) recommendations. The consensus recommendations would be a Hold. The 12 month stock price is $39.35. This implies a total return of 13.69% with 12.27% from capital gains and 1.43% from dividends based on a current stock price of $35.05.

Tatum Peregrin on Ledger Gazette talk about some recent analysts rating changes. Devon Dixon on Week Herald talks about institutional investor Guardian Capital LP increasing their shares in this company by 10%. Nelson Research Staff on Nelson Research talk about this stock. Note that they are using US$. See what analysts are saying at Stock Chase . They have varying views on this company.

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 .

The last stock I wrote about was about was FirstService Corp (TSX-FSV, NASDAQ-FSV)... learn more. The next stock I will write about will be Methanex Corp. (TSX-MX, NASDAQ-MEOH)... learn more on Wednesday, 27, 2017 around 5 pm.

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.

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