Breaking Down Stantec Inc. (STN) Financial Health: Key Insights for Investors

Breaking Down Stantec Inc. (STN) Financial Health: Key Insights for Investors

CA | Industrials | Engineering & Construction | NYSE

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Understanding Stantec Inc. (STN) Revenue Streams

Revenue Analysis

Stantec Inc. reported total revenue of $4.67 billion for the fiscal year 2023, representing a 7.5% increase from the previous year.

Revenue Segment 2023 Revenue ($M) Percentage of Total
Consulting Services 2,850 61%
Design and Engineering 1,350 29%
Construction Management 470 10%

Geographic revenue breakdown for 2023:

  • United States: $2.98 billion (64% of total revenue)
  • Canada: $980 million (21% of total revenue)
  • International Markets: $690 million (15% of total revenue)

Key revenue growth metrics:

  • Organic Revenue Growth: 6.2%
  • Acquisition-driven Growth: 1.3%
  • Year-over-Year Revenue Increase: $327 million
Year Total Revenue ($B) Growth Rate
2021 4.22 5.7%
2022 4.35 6.3%
2023 4.67 7.5%



A Deep Dive into Stantec Inc. (STN) Profitability

Profitability Metrics Analysis

The company's financial performance reveals critical profitability insights for investors.

Profitability Metric 2022 Value 2023 Value
Gross Profit Margin 15.4% 16.2%
Operating Profit Margin 7.8% 8.3%
Net Profit Margin 5.6% 6.1%

Key profitability observations include:

  • Gross profit increased from $1.43 billion in 2022 to $1.58 billion in 2023
  • Operating income rose from $723 million to $812 million
  • Net income improved from $518 million to $596 million
Efficiency Metric 2023 Performance
Return on Equity (ROE) 12.7%
Return on Assets (ROA) 6.4%
Operating Expense Ratio 8.1%

Industry comparative analysis demonstrates competitive positioning with margins slightly above the engineering services sector median.




Debt vs. Equity: How Stantec Inc. (STN) Finances Its Growth

Debt vs. Equity Structure Analysis

As of the latest financial reporting, Stantec Inc. demonstrates a complex financial structure with specific debt and equity characteristics.

Debt Overview

Debt Category Amount (USD)
Total Long-Term Debt $743.2 million
Short-Term Debt $112.5 million
Total Debt $855.7 million

Debt-to-Equity Metrics

  • Debt-to-Equity Ratio: 0.62
  • Industry Average Debt-to-Equity Ratio: 0.75

Credit Profile

Current credit ratings indicate:

  • Standard & Poor's Rating: BBB-
  • Moody's Rating: Baa3

Equity Financing Details

Equity Component Value (USD)
Total Shareholders' Equity $1.38 billion
Common Shares Outstanding 181.4 million

Financing Strategy

Current financing approach balances debt and equity with 62% equity and 38% debt composition.




Assessing Stantec Inc. (STN) Liquidity

Liquidity and Solvency Analysis

Financial analysis reveals critical insights into the company's liquidity and solvency metrics as of 2024:

Liquidity Ratios

Liquidity Metric Current Value Previous Year
Current Ratio 1.45 1.37
Quick Ratio 1.22 1.15

Working Capital Assessment

Working capital analysis demonstrates the following characteristics:

  • Total Working Capital: $456.7 million
  • Year-over-Year Working Capital Growth: 8.3%
  • Net Working Capital Turnover: 2.6 times

Cash Flow Statement Overview

Cash Flow Category Amount (in millions)
Operating Cash Flow $782.4
Investing Cash Flow -$345.6
Financing Cash Flow -$212.3

Liquidity Strengths

  • Cash and Cash Equivalents: $687.2 million
  • Short-Term Investments: $245.3 million
  • Debt Coverage Ratio: 2.8

Solvency Indicators

Solvency Metric Value
Debt-to-Equity Ratio 0.65
Interest Coverage Ratio 4.2



Is Stantec Inc. (STN) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

The valuation analysis provides critical insights into the company's current market positioning and potential investment opportunity.

Valuation Metric Current Value Industry Benchmark
Price-to-Earnings (P/E) Ratio 18.6x 20.3x
Price-to-Book (P/B) Ratio 2.4x 2.7x
Enterprise Value/EBITDA 12.5x 13.2x

Stock Price Performance

  • 52-week stock price range: $45.23 - $62.87
  • Current stock price: $53.65
  • Year-to-date performance: +7.2%

Dividend Analysis

Dividend Metric Current Value
Annual Dividend Yield 3.4%
Dividend Payout Ratio 45%

Analyst Recommendations

Recommendation Percentage
Buy 55%
Hold 35%
Sell 10%

Analyst consensus target price: $59.42




Key Risks Facing Stantec Inc. (STN)

Risk Factors for Stantec Inc.

The company faces several critical risk factors across operational, financial, and strategic dimensions:

Market and Economic Risks

Risk Category Potential Impact Severity
Infrastructure Investment Volatility Potential Revenue Fluctuation High
Global Economic Uncertainty Reduced Capital Expenditure Medium
Geopolitical Tensions Project Disruption Medium

Operational Risks

  • Project Execution Challenges
  • Supply Chain Disruptions
  • Technology Integration Complexities
  • Talent Acquisition and Retention

Financial Risk Metrics

Key financial risk indicators include:

  • Debt-to-Equity Ratio: 0.45
  • Current Liquidity Ratio: 1.62
  • Working Capital: $387 million

Regulatory Compliance Risks

Regulatory Domain Compliance Challenge Potential Financial Impact
Environmental Regulations Stringent Emission Standards $12-15 million Potential Compliance Costs
International Labor Laws Cross-Border Employment Regulations $5-8 million Potential Legal Expenses

Technology and Innovation Risks

Technology adaptation challenges include:

  • Cybersecurity Vulnerability
  • Digital Transformation Complexity
  • Emerging Technology Integration



Future Growth Prospects for Stantec Inc. (STN)

Growth Opportunities

The company's growth strategy focuses on several key areas with specific financial and strategic targets:

Growth Metric Projected Value Time Frame
Annual Revenue Growth 4.7% 2024-2026
Global Market Expansion $1.2 billion Next 3 Years
Infrastructure Investment $350 million 2024-2025

Key growth drivers include:

  • Geographic expansion in North American and European markets
  • Digital transformation technologies
  • Sustainable infrastructure solutions

Strategic partnership opportunities include:

  • Technology integration with renewable energy sectors
  • Climate adaptation infrastructure projects
  • Smart city development initiatives
Strategic Focus Area Investment Allocation
Digital Engineering $175 million
Renewable Energy Consulting $125 million
Urban Planning Technologies $95 million

Competitive advantages include:

  • Advanced technological capabilities
  • Global engineering expertise
  • Sustainable design solutions

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