Oil Drop Reveals Value
Stantec is an Alberta based global provider of consulting services in the area of infrastructure engineering. The Company’s segments are aggregated into the Consulting Services segment. Its services are offered through more than 170 locations in North America and four locations internationally
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A precipitous drop in the price of oil has carried this Edmonton based company down to an attractive valuation. We suggest a full position in this Top 10 Canadian Purple Chip. Stantec is one of the few TSX listed companies that has a very smooth and predictable earnings history.
The company has been paying a steadily rising dividend since 2012 as can be seen in the chart below (lower pane – DPS - dividend per share)
Purple Chips 12 -18 month target: $37.00
LOW VALUATION IN STANTEC INC. AT $33.20 (STN-T, $CAD 32.50) - FULL POSITION
PURPLE CHIPS TARGET: $37.00 POSITION SIZE: FULL (5.0%) P/E: 9.6X DIV: $0.37 (1.1%) MKT CAP: $3B Debt: $230M RETURN ON CAPITAL: 41.6% EARNINGS YIELD: 13.6% 5 YR EPS Growth rate*:12.9% P/E/G Ratio: 0.74X 2014 EPS: $1.72 2015 EST.: $2.09 2016 EST.: $2.37
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
