Stantec (STN) AI Stock Analysis

• Market Cap: $13.03B
• Dividend Yield: 0.77%
• Average Volume (3M): 338.75K
• Price to Earnings (P/E): 36.0
• Beta (1Y): 0.67
• Revenue Growth: 15.75%
• EPS Growth: 7.64%
• Country: CA
• Employees: 32,000
• Sector: Industrials
• Sector Strength: 63
• Industry: Engineering & Construction
• EPS (TTM): 3.20
• Shares Outstanding: 114,066,990
• 10 Day Avg. Volume: 266,035
• 30 Day Avg. Volume: 338,748
• PEG Ratio: 4.72
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.23
• Price to Cash Flow (P/CF): 21.10
• P/FCF Ratio: 23.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$142.13
• Price Target Upside: 24.44% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

Stantec exhibits strong financial performance with impressive revenue growth and cash flow management. Technical indicators support a positive outlook, though high valuation may limit immediate upside potential. The company benefits from strong earnings guidance and positive corporate events, reinforcing its strategic market positioning.

Positive Factors

Demand Trends

STN remains well-positioned to capitalize on secular demand trends including infrastructure development, energy transition, climate change, and reshoring.

Financial Performance

STN had a strong finish and the momentum is expected to carry over, trending towards meeting or exceeding many of its targets, including Adjusted EBITDA margin and Adjusted EPS growth.

Order Intake

Order intake has been strong with backlogs in Canada and the US at record levels, providing very good visibility into activity levels.

Negative Factors

Wage Inflation

Demand across STN's regions and business units remains strong, with pricing more than offsetting wage inflation and several levers to drive margin expansion.

Stantec Business Overview & Revenue Model

Company Description

Stantec Inc. provides engineering, architecture, and environmental consulting services in the areas of infrastructure and facilities in Canada, the United States, and internationally. The company provides consulting services in engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics. It also offers structural, mechanical, electrical, plumbing, and hydraulics engineering services; transportation advisory, planning and analytics, transport engineering, and technical design; paleontological and archaeological services for the rail, transportation, water, and power and energy sectors; environmental and infrastructure services; and environmental and cultural resource compliance services. The company was formerly known as Stanley Technology Group Inc. and changed its name to Stantec Inc. in October 1998. Stantec Inc. was founded in 1954 and is headquartered in Edmonton, Canada.

How the Company Makes Money

Stantec makes money primarily through fee-based contracts for its professional consulting services. The company's revenue streams are derived from providing design and consulting services across multiple sectors such as infrastructure, water, buildings, energy, and environmental services. Stantec typically enters into contracts with private and public sector clients, charging fees for their expertise in planning, designing, and managing projects. Revenue is generated based on the scope and scale of contracts, which may be fixed-price or time-and-materials based. Additionally, Stantec's earnings are enhanced by strategic partnerships and acquisitions that expand its service offerings and geographic reach, allowing it to capitalize on growth opportunities in various global markets.

Stantec Financial Statement Overview

Summary

Stantec shows strong financial health with consistent revenue growth of 15.7% and improved profit margins. The absence of EBIT in 2024 and rising debt levels are concerns, but the company's robust cash flow management ensures liquidity and financial stability.

Income Statement

Stantec has demonstrated consistent revenue growth, with a notable increase of 15.7% from 2023 to 2024. The gross profit margin improved from 38% in 2023 to 42.6% in 2024, indicating effective cost management. However, there was no EBIT recorded in 2024, which is a concern and affects profitability analysis. The net profit margin remained stable at approximately 4.8% in 2024, showcasing decent profitability.

Balance Sheet

The company's debt-to-equity ratio is 0.69 in 2024, indicating a moderate level of leverage. The return on equity (ROE) improved to 12.3% in 2024 from 12% in 2023, highlighting an effective use of equity to generate profits. With an equity ratio of 42.3%, Stantec maintains a solid capital structure, but the increasing debt levels require attention.

Cash Flow

Stantec's free cash flow grew by 13.5% in 2024, reflecting strong cash generation capabilities. The operating cash flow to net income ratio of 1.67 in 2024 indicates effective cash management. The substantial free cash flow to net income ratio of 1.39 further demonstrates the company's ability to convert earnings into cash, enhancing financial flexibility.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
7.50B	6.48B	5.68B	4.58B	4.73B
	Gross Profit
3.20B	2.46B	2.42B	1.96B	1.93B
	EBIT
0.00	530.10M	383.60M	325.70M	344.50M
	EBITDA
901.70M	801.00M	677.50M	523.40M	491.50M
	Net Income Common Stockholders
361.50M	331.20M	247.00M	200.70M	171.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
254.70M	352.90M	148.30M	193.90M	285.00M
	Total Assets
6.96B	6.08B	5.65B	5.23B	4.39B
	Total Debt
2.04B	1.73B	1.92B	1.92B	1.32B
	Net Debt
1.81B	1.38B	1.77B	1.73B	1.03B
	Total Liabilities
4.01B	3.32B	3.37B	3.22B	2.46B
	Stockholders Equity
2.95B	2.76B	2.29B	2.00B	1.93B
Cash Flow		Free Cash Flow
504.10M	444.10M	229.40M	346.40M	569.60M
	Operating Cash Flow
603.10M	544.70M	304.30M	397.00M	603.80M
	Investing Cash Flow
-605.00M	-201.70M	-73.80M	-764.80M	-102.00M
	Financing Cash Flow
-152.10M	-134.00M	-296.70M	276.50M	-412.60M

Stantec Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 114.22
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:STN, the sentiment is Negative. The current price of 114.22 is below the 20-day moving average (MA) of 118.60, below the 50-day MA of 115.70, and above the 200-day MA of 114.14, indicating a neutral trend. The MACD of 0.94 indicates Positive momentum. The RSI at 54.77 is Neutral, neither overbought nor oversold. The STOCH value of 49.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:STN.

Stantec Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STN	78 Outperform	$13.03B	36.04	12.88%	0.77%	15.75%	7.64%
WSP	75 Outperform	C$29.96B	42.49	9.33%	0.65%	11.98%	22.53%
Sector *	62 Neutral	$7.25B	12.39	3.08%	3.39%	3.63%	-14.32%
ARE	51 Neutral	C$1.05B	―	-5.87%	4.56%	-8.64%	-136.62%
GRA	48 Neutral	C$404.34M	―	-10.44%	―	12.92%	-3.66%

Stantec Corporate Events

Stantec to Design €3.2 Billion Semiconductor Facility in Italy

Stantec, alongside its partner Drees & Sommer, has been selected to provide design services for Silicon Box’s €3.2 billion semiconductor assembly and test facility in Northern Italy. This facility, which is Silicon Box’s first manufacturing expansion outside Singapore, is expected to create approximately 1,600 jobs and serve as a catalyst for advanced manufacturing investments in Italy, supporting initiatives in artificial intelligence, mobile technologies, and more. Stantec’s involvement underscores its commitment to sustainable development and aligns with the European Commission’s standards, while also reinforcing Silicon Box’s strategy to expand its semiconductor industry presence in Europe.

Stantec Achieves Top Sustainability Ranking at World Economic Forum

Stantec has been recognized as one of the world’s top 10 most sustainable companies by Corporate Knights, ranking eighth overall and leading among its industry peers. This acknowledgment at the World Economic Forum underscores the company’s commitment to embedding sustainability into its culture and strategy. Recent accolades include being named to Newsweek’s and TIME’s lists of responsible and sustainable companies. With 61% of its 2023 revenue supporting UN Sustainable Development Goals, Stantec also committed to the MEP 2040 Challenge to reduce carbon emissions in building systems by 2040, reinforcing its sustainability leadership.