Is it a good company at a reasonable price? This is a good company, but the dividend yield is very low. I generally would not buy a stock when the dividend yield is below 1%. I know that analysts’ recommendation is showing a strong buy, but when does the analysts’ recommendation offer any other results? My testing is saying that the current stock price is expensive.
I do not own this stock of Stantec Inc (TSX-STN, NYSE-STN). I bought this stock in April of 2008 to make some capital gains. It was a non-dividend paying stock at that point. A 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. I did not profit from this but sold in 2011 because it was non-core stock with no dividends. The company started to pay dividends in 2012. If I had kept this stock, I would have made a 9.1% per year return in capital gains.
When I was updating my spreadsheet, I noticed that none of the officers I have been following, outside of the CEO and CFO are currently with the company. I was following 3 officers. I notice that there is insider buying. The latest buys were at $150.90 and $151.98.
If you had invested in this company in December 2014, for $1,021.76 you would have bought 32 shares at $31.93 per share. In December 2024, after 10 years you would have received $191.68 in dividends. The stock would be worth $3,608.96. Your total return would have been $3,800.64. This would be a total return of 14.50% per year with 13.45% from capital gain and 1.05% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.93 | $1,021.76 | 32 | 10 | $191.68 | $3,608.96 | $3,800.64 |
The dividends are low, so if you buy this stock what sort of dividends would you get in the future? This chart is an attempt to show this. If dividends continue to increase by 7.58% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the current stock price of $135.19 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $1.30 | 0.96% | 5 | 7.58% | 3.87% |
| $1.87 | 1.38% | 10 | 7.58% | 8.50% |
| $2.69 | 1.99% | 15 | 7.58% | 15.16% |
The current dividend yield is low with dividend growth low. The current dividend yield is low (below 2%) at 0.67%. The 5, 10 and historical dividend yields are also low at 1.14%, 1.30% and 1.25%. The dividend growth is low (below 8% per year) at 7.6% per year over the past 5 years. The last dividend increase was in 2025 and it was for 7.1%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 26% with 5 year coverage at 30%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 19% with 5 year coverage at 23%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 12% with 5 year coverage at 13%. The DPR for 2024 for Free Cash Flow (FCF) is good at 13% with 5 year coverage at 14%. Free Cash Flow varies in 2024 from $380M to $504M. I am using the FCF of $680M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 26.03% | 30.38% |
| AEPS | 18.67% | 23.27% |
| CFPS | 12.08% | 13.18% |
| FCF | 13.82% | 14.45% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.09 and currently at 0.11. The Liquidity Ratio for 2024 is low at 1.29 and 1.27 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.55 and currently at 1.59. The Debt Ratio for 2024 is good at 1.73 and 1.66 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.36 and 1.36 and currently at 2.51 and 1.51.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.09 | 0.11 |
| Intang/GW | 0.24 | 0.25 |
| Liquidity | 1.29 | 1.27 |
| Liq. + CF | 1.55 | 1.59 |
| Debt Ratio | 1.73 | 1.66 |
| Leverage | 2.36 | 2.51 |
| D/E Ratio | 1.36 | 1.51 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2024. 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 7.58% | 26.43% | 25.17% | 1.26% |
| 2014 | 10 | 8.65% | 14.50% | 13.45% | 1.05% |
| 2009 | 15 | 8.80% | 15.31% | 14.29% | 1.01% |
| 2004 | 20 | 16.03% | 15.23% | 0.80% | |
| 1999 | 25 | 20.11% | 19.28% | 0.83% | |
| 1994 | 30 | 11.47% | 11.04% | 0.44% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 22.79, 28.76 and 35.70. The corresponding 10 year ratios are 22.96, 28.25 and 33.54. The corresponding historical ratios are 17.66, 16.75 and 25.93. The current ratio is 30.24 based on EPS estimate for 2025 of $4.47 and a stock price of $135.19. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 17.09, 23.35 and 27.85. The corresponding 10 year ratios are 17.02, 19.60 and 21.92. The corresponding historical ratios are 16.07, 15.52 and 22.26. The current ratio is 25.60 based on AEPS estimate for 2025 of $5.28 and a stock price of $135.19. The current ratio is above high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $58.00. The 10-year low, median, and high median Price/Graham Price Ratios are 1.20, 1.36 and 1.54. The current P/GP Ratio is 2.33 based on a stock price of $135.19. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 2.28. The current ratio is 4.77 based on a Book Value of $3,229.8M, Book Value per Share of 28.31 and a stock price of $135.19. The current ratio is 109% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 15.64. The current ratio is 18.28 based on Cash Flow per Share estimate for 2025 of $7.40, Cash Flow of $843.6M and a stock price of $135.19. The current ratio is 17% 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 1.25%. The current dividend yield is 0.67% based on dividends of $0.90 and a stock price of $135.19. The current dividend yield is 47% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.30%. The current dividend yield is 0.67% based on dividends of $0.90 and a stock price of $135.19. The current dividend yield is 49% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 1.26. The current P/S Ratio is 2.37 based on Revenue estimate for 2025 of $6,519M, Revenue per Share of $57.15 and a stock price of $135.19. The current ratio is 88% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is that the stock price is relatively expensive. Both the dividend yield tests says that the stock price is expensive. It is confirmed by the P/S Ratio test. Most of the rest of the testing is saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5), and Hold (1). The consensus is a Strong Buy. The 12 month stock price consensus is $168.09 with a high of $183.00 and low of $157.00. The 12 month stock price consensus implies a total return of 25.00% with 24.34% from capital gains and 0.67% from dividends based on a current stock price of $135.19.
Analysts at Stock Chase seem to like this company, but one analyst thought it was overvalued. Aditya Raghunath on Motley Fool thinks this stock will beat the broader market in the long term. Robin Brown on Motley Fool thinks this stock will benefit from Canada’s increase in defense spending. The company put out a Press Release about its fourth quarter of 2024 results. The company put out a Press Release about their third quarter results for 2025.
Simply Wall Street via Yahoo Finance reviews this stock. They say that fair value estimates for this stock varies from $109.58 to $166.64. Simply Wall Street has one warning of Has a high level of debt.
Stantec Inc is a sustainable engineering, architecture, and environmental consulting company. It offers services through the following business operating units; Environmental Services, Infrastructure, Water, Buildings, and Energy & Resources. The company's reportable segments are the United States, which derives maximum revenue, Canada, and Global. Its web site is here Stantec Inc.
The last stock I wrote about was about was Wild Brain Ltd (TSX-WILD, OTC-WLDBF) ... learn more. The next stock I will write about will be Methanex Corp (TSX-MX, NASDAQ-MEOH) ... learn more on Friday, November 28, 2025 around 5 pm. Tomorrow on my other blog I will write about Well Health Technologies.... learn more on Thursday, November 27, 2025 around 5 pm.
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