STANTEC INC (NYSE:STN) was identified through our Caviar Cruise screen, which focuses on high-quality companies with strong fundamentals. The firm, a provider of professional consulting services in engineering, architecture, and environmental sciences, meets several key criteria for quality investing. Below, we examine why STN stands out.
Key Strengths
- High Return on Invested Capital (ROICexgc): STN boasts an impressive ROIC of 33.81%, well above our 15% threshold. This indicates efficient use of capital to generate profits.
- Strong Profit Quality: With a 5-year average profit quality of 175.41%, the company converts net income into free cash flow effectively, a sign of financial health.
- Manageable Debt Levels: The debt-to-free cash flow ratio of 4.05 suggests STN can repay its debt in just over four years using current cash flows, aligning with quality investment standards.
- EBIT Growth Outpacing Revenue: STN’s EBIT growth (5-year CAGR of 11.52%) reflects improving operational efficiency, a positive signal for profitability.
Fundamental Analysis Summary
STN holds a solid fundamental rating of 6 out of 10. While its valuation appears expensive with a P/E of 30.42, the company excels in growth and profitability. Revenue surged 42.47% over the past year, and analysts expect continued growth. Profit margins are above industry averages, and solvency metrics remain healthy.
For investors seeking stable, well-managed firms with strong cash generation, STN presents a compelling case.
Our Caviar Cruise screener lists more quality stocks and is updated regularly.
Disclaimer
This is not investment advice. Always conduct your own research before making financial decisions.
