Friday, October 26, 2012

Stantec Inc

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.

In 2012, Stantec started to pay a dividend. The dividend yield is rather low at 1.75%. However, the Dividend Payout Ratios are also low. The DPR for earnings is expected to be 24% this year. The DPR for cash flow for the last 12 months gives us a DPR for cash flow of 18%.

There has been an increase in the outstanding shares over the last 5 years at 0.14% per year and this is due to stock options. The increase over the past 10 year is higher at 3% per year and this is due to stock options each year, plus a stock issuance in 2005 which increased the shares that year by 18%.

Total Return has not been very good over the past 5 years and it is only at 2.07% per year. Total return is much better over the past 10 years at 17.06% per year. The problem with the financial year of 2011 is that they had to take a write off of their good will. This hit their earnings hard.

The growth in revenue is at 15.5% and 16.8% per year over the past 5 and 10 years, respectively. The growth in revenue per share is at a very good 15% and 13% per year over the past 5 and 10 years.

Growth in earnings per share is at 11% and 17.5% per year over the past 5 and 10 years. Cash flow per share growth is not quite as good as other growth and it is at 5.7% and 13.5% per year over the past 5 and 10 years. Book value per share growth is at 8.7% and 15.8% per year over the past 5 and 10 years.

Return on Equity is good for this stock with ROE at the end of 2011 at 16.4% and the 5 year ROE at 15%. (Note this excludes the goodwill write-off.) The ROE for 2012 is expected to be similar to the ROE for 2011. The ROE on comprehensive income can vary from the ROE on net income. It can be both significantly lower as well as significantly higher.

The debt ratios have always been very good on this stock. The current Liquidity Ratio is 1.85. The current Debt Ratio is 1.97. The current Leverage and Debt/Equity Ratios are good at 2.03 and 1.03.

This company has had good growth in the past, but the main problem is that they are in the construction industry. The company's manager seem to have faith in the future has they have started paying a dividend.

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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