I do not own this stock of Stantec Inc (TSX-STN, NYSE-STN), but I used to. I bought this stock for capital gains in April 2008. I sold in September 2011. I wanted to get rid of non-core stocks and this stock had not produced capital gains. I had a capital loss of 22.6%.
When I was updating my spreadsheet, I noticed that there was a steep dive in stock price in July. It would seem to be because of the company missing the second quarter EPS estimates. The third quarter was good and price revived. They have sold off the construction side of the business.
They started to pay dividends in 2012. They have been rising their dividends every year since. The dividend yield is low (under 2%) with a current yield of 1.59% and 5 year and historical yields both at 1.37%. The dividend growth is moderate (8% to 14% ranges). See the chart below. The last dividend increase was lower at 5.5% in 2019.
The Dividend Payout Ratios are fine. Sometimes the DPR can be high because of bad year. It is the 5 year coverage that is really important. The DPR for EPS for 2018 is 125% with 5 year coverage at 38%. The DPR for 2019 is expected to b 33%. The DPR for CFPS for 2018 is 3% with 5 year coverage at 2%. The DPR for FCF for 2018 is 128% with 5 year coverage at 29%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is 0.26 with a current one at 0.24. The Liquidity Ratio for 2018 is 1.90 with 5 year median at 1.51 and a current one at 1.77. The Debt Ratio for 2018 is 1.91 with a current one at 1.69 and a 5 year median at 1.96. Leverage and Debt/Equity Ratio for 2018 is 2.10 and 1.10. The current ratios are 2.45 and 1.45 and the 5 year median ratios are 2.05 and 1.05.
The Total Return per year is shown below for years of 5 to 24 to the end of 2018. 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 chart below.
The to date value are similar except for the past 5 years where the return is a bit better at a total return of 4.19% and capital gains at 2.75%.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.24% | -0.50% | -1.91% | 1.40% |
| 2008 | 10 | 9.78% | 8.30% | 7.09% | 1.21% |
| 2003 | 15 | 12.86% | 11.92% | 0.94% | |
| 1998 | 20 | 17.90% | 17.06% | 0.84% | |
| 1994 | 24 | 16.18% | 15.52% | 0.66% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.13, 26.41 and 29.68. The corresponding 10 year ratios are 16.59, 20.34 and 24.12. The corresponding historical ratios are 12.46, 16.38 and 20.30. The current P/E Ratio is 20.90 based on a stock price of $36.57 and 2019 EPS $1.73. This stock price testing suggests that the stock price is relatively reasonable but above the median.
It is close to the end of the year, so I am also looked at 2020. The P/E Ratio for 2020 is 17.09 based on a stock price of $36.57 and 2020 EPS estimate of $2.14. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $25.84. The 10 year low, median, and high median Price/Graham Price Ratios are 10 year low, median, and high median P/GP Ratios are 1.17, 1.47 and 1.74. The current P/GP Ratio is 1.42 based on a stock price of $36.57. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.05. The current P/B Ratio is 2.16 based on a stock price of $36.57, Book Value of $1,888M and Book Value per Share of $16.96. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.37%. The current dividend yield is 1.59% based on dividends of $0.58 and a stock price of $36.57. The current dividend is some 16% above the historical median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 1.11. The current P/S Ratio is 1.10 based on a stock price of $36.57, Revenue estimate for 2019 of $3,701M, Revenue per Share of $33.25. The current ratio is 1% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable and below the median. My favourite tests of P/S Ratio and dividend yield is showing this. The P/B Ratio test, which has nothing wrong with it, is showing the stock price as reasonable and above the median by 5%.
Is it a good company at a reasonable price? The price is currently reasonable. I noticed that some analysts said that they prefer WSP Global Inc (TSX-WSP, OTC-WSPOF). This is a stock that I have and I have done well with it. This seems like a decent stock, but sometimes investors can be hard stocks that miss estimates.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (7) and Hold (2). The consensus would be a Buy. The 12 month stock price is $39.50. This implies a total return of $9.60% with 8.01% from capital gains and .59% from dividends.
See what analysts are saying on Stock Chase. Most do not like this company. Brian Pacampara, on Motley Fool likes this company’s leadership position in the design space fiscal discipline, and proven track record. Stantec announces via Reuters their three year strategic plan. John Adams on Modern Readers talk about Desjardins lowing EPS estimate for 2019. A writer on Simply Wall Street talks about insider trading. Note Theresa Jang is a newly appointed CFO.
Stantec Inc is a global engineering and construction firm. The company provides its services under fee-for-service agreements with clients. 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 Wednesday, December 18, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Kevin Bidner.... learn more on Tuesday, December 17, 2019 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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