On May 17, Zacks Investment Research upgraded North American
) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold), encouraged
by its strong first-quarter 2014 results.
Why the Upgrade?
Stantec reported first-quarter 2014 results on May 15. Earnings per
share came in at 71 cents, well surpassing the Zacks Consensus
Estimate of 65 cents. The quarterly earnings also exceeded the
year-ago tally by 16.4%.
Earnings were primarily driven by a top-line growth of 12.8% and
increased activity in the company's Water, Environmental Services
and Transportation segments. Strong momentum in these sectors
enabled the company to win several lucrative projects, which
Stantec's acquisition of Williamsburg Environmental Group, Inc. and
Cultural Resources, Inc. in the first quarter has strengthened its
geographic presence and quality of services in its Environmental
Services segment. Further, Stantec added considerable strength to
its oil and gas and industrial service verticals in the U.S. by
acquiring Processes Unlimited International, Inc. in Mar 2014.
Of late, Stantec has witnessed a positive movement in estimates on
the back of strong first-quarter 2014 results. The Zacks Consensus
Estimate for 2014 has increased by a penny to $3.21 with higher
estimate revision over the last week.
The long-term expected earnings growth rate for this stock is
currently pegged at 18%.
Looking ahead, Stantec's acquisition of Utah-based JBR
Environmental Consultants, Inc. is set to strengthen its
environmental service capabilities across the western U.S.
In keeping with its strategy of inorganic growth, Stantec also
signed letters of intent to buy SHW Group and USKH Inc. Texas-based
SHW Group is expected to fortify Stantec's present expertise in
education and help it in its pursuit of top-tier position in the
sector. The Alaskan firm USKH will likely complement Stantec's
offerings in Canada and enable it to expand its footprint in North
America. These acquisitions are expected to bolster the company's
earnings in the coming quarters and help it go from strength to
Other Stocks to Consider
Other stocks worth considering in the Consulting industry include
The Hackett Group, Inc.
Huron Consulting Group Inc.
), all of which carry a Zacks Rank #2.
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