Stantec updated August 10, 2019

Stantec is updated and rated Buy at Canadian $28.50 and U.S. $21.56.

The market was disappointed with its Q2 earnings report that featured good revenue growth but also a decline in adjusted earnings of 9.5%. The company blamed this on a delay in implementing its planned cuts to admin costs. Overall, their explanation was confusing and not well received. It appears that the company is admitting poor management of its admin costs going back some years. But they indicate that more decisive action has been taken as of Q3. Overall, it appears that Stantec has resumed growing earnings after several years of dealing with problems in its now divested construction services division. Unless there is a material slow down in the world economy, Stantec should report higher earnings over the next year .