STANTEC INC. (STN): what the price assumes

In the published model solve dated 2026-Q2, anchored at $74.21, STANTEC INC. (STN) is priced for +6.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-19.

Generated: 2026-08-25 · Source: https://boothcheck.com/report/STN

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.

Per-Model Detail (n=13)

Solvency

Bullet Takeaways

• Priced-in read: the price embeds operating-income growth of about 4.8% a year, which rates within-range; the stretch is how long that pace must persist, not the rate itself.
• Compounding services firm: a record backlog of 9.0 billion dollars, adjusted EPS up 14.7% in the first quarter, and a full-year plan for 15% to 18% adjusted EPS growth, with the share count up only about 0.6% a year.
• Watch items: the embedded assumption leans on a modest operating margin near 1.6%, the balance sheet carries about 1.0 billion dollars of net debt, and much of the demand rides a public-infrastructure spending cycle near its peak.

Bull Case

Here is the surprising part. For a stock that has compounded through acquisition for years, the market is asking for very little. The price embeds operating-income growth of only about 4.8% a year, a pace Stantec has been beating handily. Its 2026 guidance calls for adjusted earnings-per-share growth of 15% to 18% and net revenue growth of 8.5% to 11.5%, and first-quarter adjusted EPS rose 14.7%. The priced-in bar sits well below the company's own plan and its recent record. The stretch, such as it is, lies in how long the growth must persist, not in the rate.

The engine that produces this is a disciplined roll-up. Stantec buys regional engineering and design firms, folds them into one platform, and lifts their margins. Adjusted EBITDA margin reached 16.9% in the first quarter, up about 70 basis points from a year earlier, and management targets 17.6% to 18.2% for the full year. Adjusted return on invested capital runs above 13%. The acquisition of Page lifted backlog in the Buildings business by more than 40%. Acquisitions have nudged the share count up only about 0.6% a year, so the growth is not being bought with heavy dilution.

Visibility is unusually good for an industrials name. Contract backlog hit a record 9.0 billion dollars at the end of the first quarter, up 13.2% from a year earlier and worth about thirteen months of work. Water revenue grew 14.3% organically and energy and resources 8.6%, both tied to long-cycle public and private spending. On the valuation, the relative multiple and growth methods land at or above the price, and only the asset-based methods sit below it, which is normal for a people-and-reputation business whose worth is not on the balance sheet.

Bear Case

Engineering and design services move with a cycle, and the cycle has been unusually kind. A record backlog is a snapshot of demand already booked, not a promise about the next one. Much of Stantec's recent organic growth rides public infrastructure spending, water and transportation programs, and private development, all of which bend with government budgets and interest rates. When infrastructure funding plateaus after a stimulus wave, or when higher-for-longer rates slow private projects, backlog conversion and new awards can soften at the same time. The 13.2% backlog growth and mid-single-digit organic pace look strong precisely because the cycle is near a high, which is the wrong moment to extrapolate.

The growth model also has a standing appetite. A roll-up needs a steady supply of firms to buy at sensible prices, and it needs to keep integrating them without breaking the culture that makes an engineering firm productive. Slow the deal flow, or overpay in a competitive market for talent, and reported growth converges toward the organic rate, which is mid-single digits. Profit in a professional-services firm is mostly wages, so a tight labor market for engineers presses on the very EBITDA margin the story depends on. The balance sheet already carries about 1.0 billion dollars of net debt, near 1.9x operating income, from prior deals, so financing the next wave is not free while rates stay elevated.

Then the price. The stock trades at about 18x company-wide operating income, and that already assumes the roughly 4.8% annual operating-income growth continues, which rates as within-range rather than cheap. The asset value methods sit well below the price, so there is little downside cushion from tangible worth. Paying a full multiple at a cyclical high for a business that must keep acquiring to grow leaves a thin margin for error.

Valuation

At $69.51 (July 19, 2026), the price is paying about 18x company-wide operating income, and inverted that embeds operating-income growth of roughly 4.8% a year over a five-year stage. Against Stantec's own record that pace is within-range; the demanding part is the duration, not the rate. The build even leans on an operating margin near 1.6%, below the roughly 9.1% the firm earns today, so it is not a bet on margin expansion. The balance sheet carries about 1.0 billion dollars of net debt, near 1.9x operating income, and operating income covers its interest bill about 6.5x, comfortable for a services firm.

Across the applicable methods the price is justified by the relative multiple and growth reads, while the asset-based ones land below it. The price sits about 0.8x the peer multiple methods and about 0.7x the growth methods, both of which see more value than the tape. It sits about 1.5x the earnings power methods and about 1.7x the asset value methods, which is expected for a firm whose worth is its people and client relationships rather than hard assets. Net, this reads as a growth-and-quality name carried by its earnings and multiple, not a balance-sheet value play.

Catalysts

• Stantec's second-quarter 2026 results are the next hard read on whether the record backlog is still converting to organic growth and margin gains.
• Full-year 2026 guidance, reaffirmed at the first quarter, targets net revenue growth of 8.5% to 11.5%, adjusted EBITDA margin of 17.6% to 18.2%, adjusted ROIC above 13%, and adjusted EPS growth of 15% to 18%. Each quarterly print tests it.
• Backlog trend: a record 9.0 billion dollars, about thirteen months of work, at the end of the first quarter. The organic component of backlog growth is the cleaner demand signal than the acquisition-driven part.
• Acquisition cadence: the Page deal lifted Buildings backlog more than 40%; the pace and price of future deals drive the inorganic half of growth.
• Macro: public infrastructure funding, water and transportation programs, and the interest-rate path all feed the private-development side of the pipeline.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• TPC (TPC)
• FY2025 10-K: …judgments and settlements that totaled $57.2 million in 2024, including $17.7 million due to an unfavorable judgment on a completed mass-transit project in California and certain other adjustments that were individually immaterial. Operating margin was (0.9)% in 2025 compared to (17.5)% in 2024. The change in…
• FY2025 10-K: …The cancellation or reduction in scope of significant projects included in our backlog could have a material adverse effect on our financial condition, results of operations and cash flows. Competition for new project awards is intense, and our failure to compete effectively could reduce our market share and profits.…
• RYZ (Ryerson Holding Corp)
• FY2025 10-K: …leverage with suppliers as we buy larger quantities of metals inventories. Gross profit. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring…
• FY2025 10-K: .S., Canada, or any other major world economy, or a segment of any such economy, could negatively impact our sales growth and results of operations. The metals services business is very competitive and increased competition has and could reduce our revenues and gross margins. We face competition in all markets we…
• VIK (VIK)
• FY2025 20-F: …revenue and travel protection, net; and 46 Table of Contents • Onboard and other, which primarily consists of revenue related to optional shore excursions, onboard bar revenue, shop revenue and other products offered during a cruise, and services revenue. Expenses Our operating costs and expenses consist of: •…
• FY2025 20-F: …multiplied by the number of Ship Operating Days. ROIC is the ratio, expressed as a percentage, of operating income adjusted for income tax (expense) benefit, divided by Invested Capital. ROIC is a non-IFRS Accounting Standards financial measure. Management believes this is a relevant measure of our performance…
• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: …services at lower prices than we offer. 9 Table of Contents Our other services, such as senior living facilities and other ancillary services, also compete with local, regional, and national companies. The primary competitive factors in these businesses are similar to those for our skilled nursing facilities and…
• FY2025 10-K: …of each location. We believe that the primary competitive factors in the post-acute care industry are: • ability to attract and to retain qualified management and caregivers; • reputation and achievements of quality healthcare outcomes; • attractiveness and location of facilities; • the expertise and commitment of…
• PACS (PACS Group, Inc.)
• FY2025 10-K: …industry is highly competitive. Our skilled nursing facilities compete primarily on a local and regional basis with other skilled nursing facilities and with assisted/senior living facilities, from national and regional chains to smaller providers owning as few as a single facility. Competitors include other…
• FY2025 10-K: …for routine capital expenditures at our facilities to keep them competitive in their respective markets, to the extent that competitive forces cause those expenditures to increase in the future, our financial condition may be negatively affected. Our policy is to comply with laws prohibiting kickbacks and referral…
• IHG (IHG)
• FY2025 20-F: …Statements, and excludes revenue and operating loss from insurance activities of $27m and $9m, respectively. 254 IHG Annual Report and Form 20-F 2025 Other Financial Information continued Fee margin reconciliation continued c. Year ended 31 December 2024 Americas EMEAA Greater China Central b Total Revenue $m…
• FY2025 20-F: …increased by $2m to $834m , including a $2m exceptional cost in relation to the global efficiency programme, compared to an exceptional income of $4m in the prior year. Operating profit from the reportable segment a increased by $8m ( 1.0% ) to $836m . Revenue and operating profit from the reportable segment a are…
• MLCO (MELCO RESORTS & ENTERTAINMENT LIMITED)
• FY2025 20-F: …management personnel. We may experience changes in our key management in the future, including for reasons beyond our control. The loss of Mr. Lawrence Ho's services or the services of the other members of our board of directors or key management personnel could hinder our ability to effectively manage our business…
• FY2025 20-F: …balance sheet date, which are based on the prevailing exchange rate on the applicable balance sheet date. PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. 12 Table of Contents ITEM 3. KEY INFORMATION A. [RESERVED] B.…
• ZTO (ZTO Express (Cayman) Inc.)
• FY2025 20-F: …those set forth under "Item 3. Key Information-D. Risk Factors" or in other parts of this annual report on Form 20-F. A. Operating Results General Factors Affecting Our Results of Operations Demand from China e-commerce industry for express delivery services We have benefited from the rapid growth of China's…
• FY2025 20-F: …our network partners, our customer satisfaction, reputation, operations and financial performance may be materially and adversely affected. 20 Table of Contents We face intense competition, which could adversely affect our results of operations and market share. We operate in a highly competitive and consolidating…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.