Should You Think About Buying Stantec Inc. (TSE:STN) Now?
Stantec Inc. (TSE:STN), is not the largest company out there, but it received a lot of attention from a substantial price increase on the TSX over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Stantec’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Stantec
What Is Stantec Worth?
According to my valuation model, Stantec seems to be fairly priced at around 6.3% below my intrinsic value, which means if you buy Stantec today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth CA$112.07, then there’s not much of an upside to gain from mispricing. In addition to this, Stantec has a low beta, which suggests its share price is less volatile than the wider market.
What does the future of Stantec look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Stantec's earnings over the next few years are expected to increase by 71%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? STN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on STN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Stantec, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Stantec you should be aware of.
If you are no longer interested in Stantec, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
