Like many days in recent weeks, yesterday’s trading was mixed. The Dow Jones Industrial Average set a new record close of 51,999.67, up 0,64%, while the S&P 500 and Nasdaq Composite were down 0.57% and 1.15%, respectively.
Despite the tech-induced correction, the stocks hitting new 52-week highs on the NYSE and Nasdaq outnumbered those hitting new 52-week lows. On the NYSE, the 100 new highs were 2.4 times the new lows; on the Nasdaq, the 182 new highs were 1.3 times the new lows.
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I’m Canadian, so I couldn’t help notice the number of Canadian-based, dual-listed stocks, hitting new 52-week highs and lows.
Among the four hitting new 52-week lows was Edmonton-based Stantec (STN), one of the world’s leading infrastructure project management and professional services companies. Yesterday, it hit a new 52-week low of $70.76, the 19th in the past 12 months.
Despite industry headwinds, here’s why now is the time to buy Stantec stock.
Stantec’s Business Remains Solid
One of the key financial metrics for companies like Stantec is its backlog; the amount of contracted work it hasn’t yet completed.
As of March 31, its backlog was CAD$9.0 billion ($6.46 billion), 13.2% higher than a year ago, and representing approximately 13 months’ work. That’s the good news.
However, it comes with a caveat.
On July 31, 2025, it completed its CAD$725.4 million ($520.4 million) acquisition of Washington, DC-based Page Sutherland Page LLC, a 1-400-person architecture and engineering firm. It was Stantec’s 150th acquisition since its IPO in 1994. Excluding the company’s acquisitions, its organic backlog growth in the first quarter of 2026 was 5.4%.
That’s still good, but it means that when analyzing this type of business, which makes many acquisitions each year, it’s important to separate organic growth from acquisition growth.
Further, acquisitions like Page, which were financed with a combination of cash (62%) and debt (38%), increase balance sheet leverage. It finished the first quarter with net debt of CAD$1.45 billion ($1.04 billion), 13% of its current market cap, and 1.5 times its trailing 12-month EBITDA (earnings before interest, taxes, depreciation and amortization).
Stantec has a target net debt-to-adjusted EBITDA range of 1.0x to 2.0x, so investors needn’t worry about its balance sheet.
It’s very healthy.
Why Is Stantec Stock Down 31% Over the Past Year?
Not only is Stantec down nearly 31% in the past 12 months, but its shares are trading at their lowest level since December 2023.
However, analysts remain positive about Stantec. Of the 12 analysts covering it, 11 rate it a Buy (4.50 out of 5), with a $107.93 target, 51% higher than its current price.
The analyst’s EPS estimates are $4.50 per share for 2026 and $4.90 per share for 2027. Its stock trades at 15.9 times the 2026 forecast. That’s lower than it's been since 2019.
Some suggest Stantec’s valuation had become stretched. A year ago, its forward price-to-earnings ratio was nearly 27x, almost 70% where it is now.
At the end of 2019, when its forward PE was about where it is today, it had annual revenue of CAD$3.71 billion ($2.66 billion) and EBITDA of CAD$434 million ($311.4 million), with an EBITDA margin of 11%. Today, revenues are 79% higher, EBITDA is 126% higher, and the EBITDA margin is 14.8%, up 310 basis points from 2019.
There is no question that the business is stronger. Even if you split the difference and agreed that the forward PE is halfway between 27x and 16x earnings at 21.5x earnings, its share price would be $96.75, 35% higher than it is now.
Another argument is that AI will eat into Stantec’s profits and the rest of the engineering and infrastructure consulting firms it competes against. They’ve been lumped in with software stocks.
“‘We have spent the last few weeks conducting analyst marketing,’ he wrote in a note to clients. ‘And it is very clear that the pedestal that these stocks were on over the previous five years is no longer in place and that there is an uphill battle ahead to regain premium valuation multiples,’” The Globe and Mail reported Stifel analyst Ian Gillies’ May comments about the headwinds Stantec’s industry faces.
So, Stantec might have to wait years for its share price to return to its 2025 valuation. In the meantime, it will use more of its free cash flow -- CAD$682.6 million ($489.7 million) in the trailing 12 months -- for share repurchases than acquisitions.
On March 12, it launched an NCIB (normal course issuer bid) to repurchase up to 2.28 million of its shares over the next 12 months. Between March 13, the first day to buy back shares, and May 13, the day Stantec announced its Q1 2026 results, it did not repurchase any of its stock. Expect this to accelerate through the rest of 2026.
Another possibility is that investors have gotten more cautious about risk-on assets due to the geopolitical issues the world is currently entangled in, although you wouldn’t know it from the gains large-cap tech stocks -- S&P 500 tech stocks up 18.6% through June 16 -- have achieved in 2026.
Rightly or wrongly, Stantec and its peers have been painted with the same brush as software stocks, and sometimes it’s hard for bearish investors to reverse course.
The Bottom Line on Stantec Stock
Between 2016 and 2022, Stantec repurchased an average of CAD$49 million ($35.3 million) of its stock annually. I could see it buying back three times as much annually over the next few years if its share price remains stuck in the $70s or $80s. Dividends will continue to increase by 8% annually as they have in the past five years.
Ultimately, you could see a total yield of 3.5% or higher. Over the last decade, it only got close once in 2019, at 3.48%, according to Morningstar.
Based on its current enterprise value of CAD$13.67 billion ($9.81 billion), its current free cash flow yield is 5.0%. I consider anything between 4% and 8% to be fair value.
So, while you’re not getting a bargain here, you’re definitely not overpaying at current prices. In a decade, you won’t remember why you had reservations about owning Stantec for the long haul.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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