Stantec: Priced For Trouble, Built For Resilience

In today's busy lives, nobody knows which company builds the roads they drive on, treats the water that comes out of their tap, or engineers the dams that keep the lights on. To keep up with the increasing population, many countries are investing a large portion of GDP into building infrastructure and providing a sustainable future for future generations. Be it AI, building space launch complexes, or constructing the biggest dams in the world, countries are rushing towards next-generation infrastructure to keep the economic cycle rolling. A lot of companies are taking on the task of providing a blueprint to achieve these goals, and one of them is an underfollowed Canadian operator called Stantec Inc. (STN). Stantec is a relatively underfollowed Canadian company that specializes in engineering consultancy and delivers the modern infrastructure that keeps communities running – while quietly building one of the sector's more conservatively managed growth stories. In this article, I will go through the company overview, financial metrics, technical breakdown, and Q2 earnings preview.

Business Overview

Stantec was founded in 1954 and is headquartered in Edmonton, Canada. It operates across five business units – Infrastructure, Water, Buildings, Environmental Services and Energy Resources. The company has a footprint across multiple sectors, which makes it a quiet but essential part of the economic infrastructure. The company’s primary revenue driver is to provide professional services to clients instead of taking on the labor-intensive work of financing and physical construction. This asset-light structure keeps the company agile during boom-and-bust economic cycles. The company operates across the globe, with the US and Canada being its primary jurisdictions for revenue recognition. At the time of writing, Stantec trades at $102, with a market capitalization of $11.65 billion and 114.1 million shares outstanding. The company is trading at a forward adjusted P/E of 16.5x, with management guiding to 15-18% adjusted EPS growth in the last quarterly call. On an adjusted EBITDA basis, it made $287.0 million, with estimated guidance for FY2026 within $1.24-1.32 billion, and the company exiting last quarter with net debt of $1.50 billion.

Q1 2026 Earnings Snapshot

For Q1 2026, the company saw 9.10% YoY total growth, with the US contributing 10.9% while Canada contributed 1.10%, with the remaining areas contributing 13.20%. The organic growth was almost flat in both the US and Canada, while global growth did the heavy lifting for the quarter.

(Source - Author compilation from Stantec Q1 results)

Breaking down per segment, the company reported double-digit growth in the Water segment, followed by Energy & Resources, while negative growth was seen in the Buildings and Infrastructure segments, with Environmental Services providing flat growth.

(Source - Author compilation from Stantec Q1 results)

The company also has an extensive backlog of $8.9 billion, with close to 60% of backlog revenue from the US, while the remainder comes from Canada and the rest of the world. The company has a book-to-bill ratio of 1.20x, which indicates healthy demand and supports future growth.

(Source - Author compilation from Stantec Q1 results)

The Page Bet

To further facilitate growth, the company recently acquired Page Southerland Page, a consultancy founded in 1898 with 1,400 employees. The transaction closed in July 2025, and the main driver of the acquisition was Stantec gaining an expanded portfolio in US infrastructure buildings. With the US being its main growth market, the Page acquisition, on paper, added the needed boost to Stantec’s portfolio. Also, with the Page acquisition, Stantec will gain exposure to one of the faster-growing markets — including data centers, advanced fabrication, and clean room facilities. The company paid a total of $725.4 million for the transaction, with $449.3 million in cash and $276.1 million coming in deferred seller notes. The company completed the deal on financially prudent terms, with net debt to adjusted EBITDA remaining at only 1.3 times. On the surface, the company has a healthy backlog, with multiple areas growing in the high teens or single digits, and the Page acquisition adding another potential lever for growth; however, the market is pricing it at lower multiples compared to its peers, mainly Jacobs Solutions (J) and WSP Global (WSP). The answer lies in its organic growth.

Where the Cracks Are

In the last quarterly earnings, growth slowed in two of the company's five segments, most notably Infrastructure and Buildings. While money is being thrown around like a drunken sailor by Big Tech companies (Amazon (AMZN), Google (GOOGL), Meta (META), Oracle (ORCL)) toward building AI infrastructure and data centers, Stantec is coming up short in taking revenue share away from its competitors. In its latest Q2 report, Jacobs Solutions reported 9.4% growth in critical infrastructure, with headline organic growth at 10.0%. Comparing that to last quarter's results for Stantec, it reported -1.6% growth in infrastructure, with headline growth at 3.6%. However, it is important to note that Stantec's Q2 earnings are scheduled for August 10, which should provide a better picture between the two companies. But even looking at pure financial metrics, management has much to explain about the flatlining of growth in one of the most in-demand sectors right now. The only bright spot for the company is the double-digit growth it has shown consistently over the past year in the Water segment. When compared to its peers, Stantec has grown revenue in this segment by 14.3%, compared to 1.5% for Jacobs Solutions; however, it is still trailing WSP, with WSP's Water segment contributing 20% to its revenue growth. So, on face value, the market has appropriately re-rated the company to a lower multiple — but is the market right? The answer lies in its financial health.

The Balance Sheet Counterweight

Stantec has consistently operated using a more conservative financial approach than its competitors. This has allowed it to have one of the lowest leverage ratios compared to its competitors. Despite completing the Page acquisition for $725 million, it has managed to keep its net debt at only 1.3 times adjusted EBITDA at the end of Q1 2026. Compared to its competitors, both of whom are running net debt at a 1.8–2.3 times rate. Being financially conservative has allowed the company to worry less about any potential negative market sentiment on interest rates. Also, the company has a share buyback program, which was renewed in March 2026, allowing the company to purchase up to 2.2 million shares, roughly 2% of the company. The company is trading at a P/E ratio of 16.5x 2026, compared to its peers, who trade around 20x. All this shows management is willing to create shareholder value while remaining financially stable for longer-term growth. However, much of its future valuation will depend on what the previous quarter looked like and how closely management succeeded in rectifying the slowing growth. For Q2 earnings, the Street is expecting the company to produce 12.3% growth, with organic growth slated at 5% or better, in line with estimates.

(author summary based on Q2 Street estimates)

The market will pay particular attention to the synergies of the Page acquisition and how much growth it will bring to the company's lagging sectors. Since the Water segment has carried much of the revenue growth over the last quarter, it will be interesting to see how much further growth is achieved in this segment. Any negative growth or downward projection will be treated harshly by the market, and the stock could get further re-rated; however, I find this scenario less likely, considering the company has a significant backlog and we are currently in one of the heaviest infrastructure spending cycles.

Takeaway

I view Stantec as a small starter position in the current scenario. While its growth has been disappointing, it has made financially conservative decisions to create long-term value. With the acquisition of Page, whose specialty lies in infrastructure and buildings, it has increased its viability for further projects within the US, which will help its growth cycle. Trading at a multiple close to 16 times and 14.9 times 2026 and 2027 earnings respectively, the market has decided to give a discount to those who believe in its story. In the end, much will become clear after next week's earnings, but for now, I like this Canadian underdog, and I am taking a punt on it.