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Stantec (STN) Stock Rises 2% Following Q4 Earnings Beat

Stantec Inc. STN reported mixed fourth-quarter 2022 results with earnings beating the Zacks Consensus Estimate but revenues falling short of the same.

The stock gained 2% since the earnings release on Feb 22 in response to the better-than-expected earnings performance.

Adjusted earnings (excluding 11 cents from non-recurring items) came in at 60 cents, beating the Zacks Consensus mark by 13.2%. Adjusted earnings increased 33.3% from the year-ago figure.

Total revenues of $832.7 million slightly missed the consensus estimate and decreased 11.5% on a year-over-year basis.  The top line includes 10.6% organic growth and 9.8% growth from acquisitions.

Stantec Inc. Price, Consensus and EPS Surprise

 

Stantec Inc. Price, Consensus and EPS Surprise
Stantec Inc. Price, Consensus and EPS Surprise

Stantec Inc. price-consensus-eps-surprise-chart | Stantec Inc. Quote

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Stantec’s shares have gained 17.6% in the past year compared with its industry’s 9.5% decline.

Quarter Details

The project margin came in at $620.5 million indicating a 22.5% increase from the year-ago figure. Project margin, as a percentage of net revenues, for the quarter came in at 54.9% as compared to 55.3% a year ago. The increase is supported by net revenue growth and solid project execution.

Adjusted EBITDA grew 34.9% to $191.7 million on a year-over-year basis. The adjusted EBITDA margin was at 17%, 150 basis points more than the previous year figure.

The backlog reduced to $5.9 billion from $6.2 billion reported at the end of the previous quarter.  The figure marks an increase of 14.9% from the Dec 31 2022 figure.

Balance Sheet & Cash Flow

Stantec generated $209.6 million in cash from operating activities in the quarter. The free cash flow generated by the company in the current quarter is $135.10 million. Capital expenditures were $28.6 million. During the reported quarter, the company paid $19.9 million through dividends.

The company has generated an adjusted return on invested capital of 10.5%in line, 20 basis points more than the year-ago reported quarter.

2023 outlook

The company expects the net revenues to go up 7-11% in the year as compared to 2022.

Adjusted EBITDA margins are expected to stay in the band of 16-17%. The company targets to generate a return on invested capital of more than 10.5%.

Stantec's Board of Directors declared a dividend of $0.195 per share, payable on April 17, 2023, to shareholders of record on March 31, 2023, representing an 8.3% increase.

Stantec currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The following stocks from the Business Service sector reported better-than-expected fourth-quarter results.

Gartner, Inc. IT,currently having a Zacks Rank of 3, reported better-than-expected fourth-quarter 2022 results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Adjusted earnings (excluding 49 cents from non-recurring items) per share of $3.70 beat the Zacks Consensus Estimate by 44% and increased 23.8% year over year. IT’s revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.6% and improved 15.2% year over year on a reported basis and 20% on a foreign-currency-neutral basis.

Aptiv PLC APTV, currently carrying a Zacks Rank of 3, reported better-than-expected fourth-quarter 2022 results. Adjusted earnings (excluding 41 cents from non-recurring items) of $1.27 per share beat the Zacks Consensus Estimate by 6.7% and increased more than 100% on a year-over-year basis. APTV’s revenue surpassed the Zacks Consensus Estimate by 6% and increased 12.2% year over year.

 

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