WSP Stock at 52-Week Highs, But More to Come

WSP (TSX:WSP) stock continues to surge past 52-week highs, but there could certainly be more to come for this great stock.

| More on:

Image source: Getty Images

WSP Global (TSX:WSP) has been making waves in the stock market recently, reaching and surpassing its 52-week highs. Over the past year, the stock has experienced remarkable growth, surging from $143 to $193, representing a staggering 34.97% increase. This remarkable performance raises the question: Is there more room for growth ahead?

What’s behind WSP stock’s success

WSP stock is a leading player in the professional services industry, specializing in providing engineering and consulting services to various sectors, including infrastructure, environment, and transportation. With a rich history spanning several decades, the company has consistently adapted to changing market dynamics and evolving industry demands.

Over the last decade, WSP stock has strategically expanded its portfolio and presence globally, making it a formidable force in the sector. One significant development in recent years was the acquisition of the Environment & Infrastructure business of John Wood Group plc in September 2022. This strategic move has propelled the company’s growth, enhancing its capabilities and market reach.

Future growth prospects

The key to understanding why WSP stock could continue its upward trajectory lies in its impressive financial performance. In the second quarter of 2023, the company reported robust financial results. Revenues and net revenues surged by 31.2% and 29.8%, respectively, compared to the same period in 2022.

Net revenue organic growth reached an impressive 9.3% in the quarter, with the U.S., Australia, the U.K., and New Zealand showing the highest growth. The acquisition of John Wood Group’s Environment & Infrastructure business contributed significantly to this growth. Backlog stood at a record-high of $14.3 billion, representing 12 months of revenues. This indicates a strong demand for the company’s services.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 31.1% compared to the previous year. While some metrics saw a minor increase, the overall financial health of the company remains strong. Cash inflows from operating activities improved significantly, although free cash outflow was impacted by changes in U.S. tax regulations.

Outlook looks good

Despite a slight increase in the net debt-to-adjusted EBITDA ratio, the company remains in a favourable financial position. When incorporating a full 12 months of adjusted EBITDA from acquired businesses, the net debt-to-adjusted EBITDA ratio remains stable at 1.9.

The company’s revised financial outlook for 2023 is notably bullish, with increased projections for net revenues and adjusted EBITDA. This upward revision reflects the company’s confidence in its growth potential. Furthermore, it reflects its ability to capitalize on the strong demand for its services.

Bottom line

WSP stock’s remarkable journey to 52-week highs is not just a fleeting trend. It’s a testament to its resilience and adaptability. Its strategic acquisitions, strong financial performance, and optimistic outlook for 2023 all point to a company poised for further growth.

Alexandre L’Heureux, WSP’s president and chief executive officer, summarized the company’s position well: “Our growth has surpassed expectations and was driven by continued momentum across our business and the high demand for our services. Considering these positive trends, our record-high backlog and recent wins, we are raising our financial outlook and are moving into the second half of the year with confidence and a continued focus on rigorously executing our plan.”

Investors looking for a strong choice in today’s market should take note of WSP stock. It continues to have a proven track record of success, a robust financial position, and a positive outlook. WSP Global is well positioned to surge past its current 52-week highs. It should continue its growth trajectory in the coming months and years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends WSP Global. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Illustration of bull and bear
Dividend Stocks

Defensive Sectors: A Safe Haven for Canadian Investors in a Bear Market

There are defensive stocks, and then there are stocks that will help your portfolio soar out of this bear market.…

Read more »

Dividend Stocks

How to Build a Passive Income Portfolio Starting With Just $6,500

Looking to build a passive income portfolio? There's no shortage of great options on the market, including these three stellar…

Read more »

edit Businessman using calculator next to laptop
Stocks for Beginners

Canadian Tire Stock Raises Dividend Despite Quarterly Loss

Canadian Tire (TSX:CTC.A) stock hasn't exactly been doing great these days, laying off 3% of its workforce. So, why the…

Read more »

Dividend Stocks

TFSA Investors: Just $5,000 Can Create $1,567 in Passive Income

Passive income in a TFSA is ideal, especially if you're looking for long-term income from all sources of passive income,…

Read more »

A doctor takes a patient's blood pressure in a clinical office.
Dividend Stocks

1 CRA Benefit Most Canadians Can Claim, but Haven’t!

This CRA benefit is one every single one of us should double check whether we can claim, because you could…

Read more »

woman data analyze
Stocks for Beginners

Canadian Investors: Don’t Put All Your Eggs in the SPY Basket

Are you interested in investing in the American stock market? Don’t put all your eggs in the SPY basket!

Read more »

grow dividends
Stocks for Beginners

goeasy Stock Jumps After Record Earnings

goeasy (TSX:GSY) stock is boring, and we like it -- especially with record results that should lead to more in…

Read more »

four people hold happy emoji masks
Stocks for Beginners

3 Top Stocks Under $30 to Buy in November 2023

These TSX stocks still trade below the $30 range, offering a chance for superior growth in the coming year and…

Read more »