Stantec (STN) Shares Decline 4% Despite Q1 Earnings Beat

Stantec Inc. STN reported impressive first-quarter 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

The better-than-expected results failed to impress the market as the stock declined 3.5% since the earnings release on May 8.

Quarterly earnings came in at 67 cents per share, surpassing the Zacks Consensus Estimate by 6.4% and increasing 24.1% on a year-over-year basis. Revenues of $1.02 billion beat the consensus mark by 2% but declined 10.7% from the year-ago quarter.

Stantec’s shares have risen 40.6% in the past year, outperforming the 16% rally of the industry it belongs to and 27.1% growth of the Zacks S&P 500 Composite.

Stantec Inc. Price and EPS Surprise

 

Stantec Inc. Price and EPS Surprise

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

Other Quarterly Details

Revenues from the Canada segment amounted to $323.7 million, up marginally from the year-ago quarter. Acquisition growth from Morrison Hershfield drove this segment’s revenues. United States reported revenues of $733.9 million, increasing 14.1% year over year. Global revenues amounted to $312.5 million, up 11.5% from first-quarter 2023. The uptick was backed by the 8% increase from ZETCON.

The project margin increased 12.5% on a year-over-year to $742.5 million. The project margin, as a percentage of net revenues, came in at 54.2%, up 50 basis points (bps) from the year-ago quarter. Continued discipline in project execution, the ability to raise rates on certain projects to reduce the impacts of wage inflation and increased selectivity in project pursuits resulted in the surge of the project margin.

Contract backlog came at a record high of $7 billion. Adjusted EBITDA grew 18.3% year over year to $211.9 million. The adjusted EBITDA margin came in at 15.5%, up 90 bps from the year-ago quarter. Stantec generated $20.2 million of cash from operating activities in the quarter.

2024 Outlook

For 2024, net revenue growth is expected to be 11-15%. The adjusted EBITDA margin is anticipated to be 16.2-17.2%. The company expects the adjusted net income margin to be more than 8%. Adjusted diluted EPS growth is expected to be 12-16%.

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

Earnings Snapshot

Waste Connections, Inc. WCN reported solid first-quarter 2024 results.

Waste Connections’ adjusted earnings (excluding 15 cents from non-recurring items) of $1 per share beat the Zacks Consensus Estimate by 2% and increased 16.9% year over year. Revenues of $2.1 billion surpassed the consensus estimate by 1% and rose 9.1% from the year-ago quarter.

Omnicom Group Inc. OMC reported impressive first-quarter 2024 results.

OMC’s earnings of $1.67 per share beat the consensus estimate by 9.9% and increased 7.1% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 1.6% and increased 5.4% year over year.

Trane Technologies plc TT reported better-than-expected first-quarter 2024 results.

TT’s adjusted EPS of $1.94 surpassed the Zacks Consensus Estimate by 18.3% and increased 37.6% year over year. Revenues of $4.2 billion beat the consensus mark by 5.7% and increased 15% year over year on a reported basis and 14% organically. Bookings were up 18% year over year on a reported basis and 17% organically.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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