Up 17% in the Last Month, Is Stantec Stock a Buy Today?

Stantec stock (TSX:STN) has been rising higher and higher from huge announcements, and more good news looks like it’s on the way for investors.

| More on:
Car, EV, electric vehicle

Image source: Getty Images

Shares of Stantec (TSX:STN) stock have been climbing steadily the last month, up 17% in that time period. So today, let’s look over what’s been going on with Stantec stock. And furthermore, whether it’s still a buy on the TSX today.

First, the earnings

The climb in share price first started as Stantec reported strong earnings for its third quarter. The design and engineering company also increased its future outlook for the year, adding to growth for the stock.

Net revenue came in at $1.3 billion for the quarter, up 13.5% over the year before. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also rose by 18.3%, with its backlog up 7.6% to $6.4 billion. It was a record third quarter, with strong demand continuing in the United States and Canada. This has led to massive hiring, and even more growth expected.

The company increased its 2023 range across the board. Net revenue rose from between 10% and 13% growth to between 12% and 14%. Adjusted EBITDA was up from 16.3% to 16.7% to between 16.7% and 17.1%. Adjusted net income rose from above 7.5% to above 8.2%, with adjusted diluted earnings per share (EPS) also seeing a huge increase. The company now expects growth of between 22% and 25%, almost double the 12% to 15% expected earlier.

Next, acquisitions

Stantec stock then went on to announce two acquisitions and a new factory after earnings. That’s all in just a month! The company announced it would be acquiring ZETCON in Germany, with a focus on infrastructure construction. While terms weren’t announced, this provides 13 offices across Germany, with a large construction market valued at EUR427 billion in 2022.

Then, as Canada continues to see growth in battery-charging stations for electric vehicles, Stantec stock announced a new facility out of British Columbia. This would create the E-One Moli Energy facility, building lithium-ion batteries in the province. It will become the largest factory in Canada for high performance lithium-ion batteries, with over 135 million battery cells each year.

Finally, Stantec stock announced a buyback program, issuing 3,108,450 common shares from its treasury. These were at a price of $92.50 per share, now lower than the price of $101.50 as of writing. This brought in proceeds of $287,531,625 for the company, and will be used to repay balances on credit, as well as more acquisitions.

More to come!

Yes, there are likely to be even more acquisitions for Stantec, and the company is quite positive about the future. This was recently announced during an Investor Day, where Stantec stock stated its strategic plan for 2024 to 2026.

So right now, Stantec stock may be just warming up. With shares up 17% in the last month, it may not look like a steal. Especially with shares up 53% in the last year. However, there is a reason for this growth. Stantec stock is taking advantage of growth opportunities, while still putting cash aside to pay down debt. It would take just 82% of its equity to pay off all debts.

So while it trades at just 1.8 times sales and 4.7 times book value, and with EV-to-EBITDA (enterprise value-to-earnings before interest, taxes, depreciation and amortization) at 16.7, it looks like a great deal on the TSX today.

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Buy 32 Shares in This Glorious Dividend Stock and Create $1,074.88 in Passive Income

This dividend stock is also a growth stock you're going to want on your side over the next year and…

Read more »

Mature financial advisor showing report to young couple for their investment
Energy Stocks

New Study Shows 36% of Couples Hide Spending From Partner, And It’s a Pressure Point

Having the hard talk? It can literally pay to do so. Here's how to stop holding out on your partner…

Read more »

Stocks for Beginners

Value Investors: Are You Buying and Holding Forever? Think Again

Value stocks are great, but if you don't have a goal in mind that stock can quickly turn from value…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Stocks for Beginners

2 Stocks Under $50 New Investors Can Buy Confidently

Are you new investor looking to start small before buying stocks trading in hundreds and thousands? You could consider these…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

3 Undervalued Software Stocks Set to Jump in 2024

These software stocks are overdue for a recovery, and that should certainly happen as they move back to profit in…

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Dividend Stocks

Planning a Wedding? Here’s How to Actually Make Money on the Big Day

Inflation, interest rates, it all adds up when planning a wedding. So how can you ask for cash, keep costs…

Read more »

Caution, careful
Stocks for Beginners

2 Threats to the Market Rally to Keep a Close Eye On

There are two threats that could possibly trigger another selloff, so be sure to watch for them in the near…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Stocks for Beginners

This Phenomenal Canadian Growth Stock Jumped 9% and Still Has More Upside

This Canadian stock surged after beating earning estimates, but there is even more room to run for this stock climbing…

Read more »