Monday, October 29, 2012

Stantec Inc 2

On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...

I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I had originally bought it for some capital gain and held it from 2008 to 2011 and lost some 23% on this transaction. I did not buy much and my timing was off.

Insider trading shows some insider buying and a net of insider selling of $6.2M. Insider selling is at $6.3M. Insider selling is by CEO, CFO, officers and directors. Insider selling by directors is at $5.6M, and so is the most. It seems like insider are getting rid of options. (Often insiders tread options as part of their pay.)

Insiders not only have options but they also have Common Shares Restricted Share Units and Common Shares Deferred Share Units. There are a lot of options and option like vehicles outstanding. There is not only the CEO, CFO and directors with lots of options, but executive officers and other officers have lots of options also. Insiders do have lots of common shares also and shares worth into the millions. For example the CEO has common shares with $2.8M, a director has shares worth $5.2M and a senior executive has shares worth $3.7M.

The 5 year low, median and high median Price/Earnings Ratios are 15.52, 20.40 and 25.29. The current P/E ratio is 13.89 based on 2012 earnings of $2.50 and a stock price of $34.72. On this basis the stock price is low.

I get a current Graham Price of $28.81. The 10 year low, median and high median Price/Graham Price Ratios are 0.98, 1.26 and 1.49. The current P/GP ratio is 1.20. This shows that the current stock price is reasonable.

I get a 10 year Price/Book Value per Share Ratio of 2.53. The current P/B Ratio is 2.35, a value some 93% of the 10 year ratio. This shows that the current stock price is reasonable.

This company has just started to pay dividends, so I can do a stock test using dividend yield. However, I see it as a good sign that the company has started to pay dividends.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $36.10 which implies a total return of 5.7% with 3.97% from capital gains and 1.73% from dividends. (To me that seems like little return for a Buy consensus.)

On October 17th, Canaccord Genuity raises target to C$41.50 from C$35 for Stantec Inc. The rating stays at Buy. See Jags Report. An article in the Financial Post talks about SmarTrend identifying an uptrend in this stock.

Good company. The price is reasonable to low. Starting dividends adds a new dimension to this stock.

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. See my spreadsheet at stn.htm.

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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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