I do not own this stock of Stantec Inc (TSX-STN, NYSE-STN) but I used to. 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.
When I was updating my spreadsheet, I noticed when updating the stock prices that the stock chart for this company just shows the price going up and down but not going anywhere. Price was higher in 2014 than later. Price had a plateau from 208 to 2012, then there was a sharp rise and then a plateau from 2013 to today.
Dividend yields are low and the dividen0d growth is moderate. The current dividend yield is 1.83%. The 5 year dividend yield is 1.25% and since 2013 is 1.31%. The 5 year dividend growth is 10.20% per year.
They can afford their dividends. The Dividend Payout Ratio for 2017 was 57% with 5 year coverage at 38%. The DPR for CFPS for 2017 was 2% with 5 year coverage at 2.7%.
The Long Term Debt/Market Cap Ratio for 2017 is low at 0.13. It has increased by the third quarter of 2018 to a still low value of 0.26. The Liquidity Ratio has varied and it is a bit low in 2017 at 1.39, but improves by the third quarter of 2018 to 1.67. The 5 year median is 1.51. The Debt Ratio has always been good with the 2017 ratio at 1.96 and 5 year median at 2.15. Leverage and Debt/Equity Ratios are also fine with ratios at 2017 at 2.04 and 1.04 respectively and 5 year medians at 2.05 and 1.05 respectively.
The Total Return per year is shown below for years of 5 to 23 to the end of 2017. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 10.20% | 13.70% | 12.10% | 1.60% |
| 10 | 6.90% | 6.11% | 0.79% | |
| 15 | 16.18% | 15.48% | 0.70% | |
| 20 | 18.02% | 17.47% | 0.56% | |
| 23 | 17.55% | 17.07% | 0.48% |
Doing long term total returns to date gives basically the same answer as above except for 5 year duration where in the last 5 years we have a negative total return. This is mainly because the stock price is down around 15% this year.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 10.20% | -0.43% | -1.83% | 1.40% |
| 10 | 8.34% | 7.13% | 1.21% | |
| 15 | 12.89% | 11.95% | 0.94% | |
| 20 | 17.92% | 17.08% | 0.84% | |
| 23 | 18.71% | 17.96% | 0.75% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.66, 20.27 and 22.95. The corresponding 10 year Ratios are 16.59, 20.34 and 24.12. The historical median ratios are 12.38, 15.71 and 18.99. The current P/E Ratio is 26.33 based on a stock price of $30.02 and 2018 EPS estimate of 1.14. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $20.71. The 10 year low, median, and high median Price/Graham Price Ratios are 1.16, 1.47 and 1.74. The current P/GP Ratio is 1.45 based on a stock price of $30.02. This stock price testing suggests that the stock price is relatively reasonable but above the median. It is almost expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.10. The current P/B Ratio is 1.80 based on Book Value of $1902M, Book Value per Share of $16.72. and a stock price of $30.02. The current ratio is some 14.5% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.31%. The current yield is 1.83% based on dividends of $$0.55 and a stock price of $30.02. The current yield is 40% above historical one. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.12. The current P/S Ratio is 0.97 based on 2018 Revenue estimate of $43,533M Revenue per share of $31.05 and a stock price of $30.02. The current P/S Ratio is some 14% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The P/E Ratio, which has never been my favourite measure, says the stock price is expensive as does the P/GP Ratio. Since they have only been paying dividends for 6 years, the dividend yield test may not be that good. Both the P/B Ratio and P/S Ratios have no negative aspects for this stock and they are quite good measurements. They both say the stock is relatively reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $38.59 which implies a total return of 30.38% with 28.55% from capital gains and 1.83% from dividends.
Asher Wright on Simply Wall Street talk about this company’s ROE, which is currently low. David Hasegawa on Press Oracle talks about recently ratings for this company. Mary Kom on Fairfield Current talks about institutional investors. Andrew Button on Motley Fool suggests that you would be better off with a company with more upside. See what analysts are saying about this company on Stock Chase. They say good things about the company, but one analyst prefers Aecon.
Stantec Inc is a global engineering and construction firm. It designs buildings, energy and resource projects, and infrastructure developments. Stantec derives the substantial majority of its sales from the United States and Canada, and the company works in both the public and private sectors. 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 Friday, December 21, 2018 around 5 pm. Tomorrow on my other blog I will write about Understanding Financial Statements.... learn more on December 20, 2018 around 5 pm.
Also, on my book blog I have put a review of the book Capital Compounders by Robin Speziale learn more...
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