SNC-Lavalin Group (TSX:SNC) - Share price, News & Analysis

Q: What is the Fair Price of SNC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SNC (CA$22.14) is trading below our estimate of [[fair value]] (CA$77.1)

SNC fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	3/6
Past Performance	2/6
Financial Health	1/6
Dividends	0/6

SNC Stock Overview

SNC-Lavalin Group Inc. operates as an integrated professional services and project management company.

Rewards

Trading at 71.3% below our estimate of its fair value

Earnings are forecast to grow 30.14% per year

Became profitable this year

Risk Analysis

Interest payments are not well covered by earnings

Large one-off items impacting financial results

Significant insider selling over the past 3 months

SNC-Lavalin Group Competitors

WSP Global

TSX:WSP

CA$17.2b

Aecon Group

TSX:ARE

CA$800.0m

Bird Construction

TSX:BDT

CA$401.1m

Finning International

TSX:FTT

CA$4.2b

Price History & Performance

Summary of all time highs, changes and price drops for SNC-Lavalin Group
Historical stock prices
Current Share Price	CA$22.14
52 Week High	CA$38.25
52 Week Low	CA$21.39
Beta	1.42
1 Month Change	-12.21%
3 Month Change	-26.47%
1 Year Change	-31.96%
3 Year Change	-16.77%
5 Year Change	-60.98%
Change since IPO	1,595.83%

Recent News & Updates

May 23

Is SNC-Lavalin Group (TSE:SNC) A Risky Investment?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Shareholder Returns

	SNC	CA Construction	CA Market
7D	-2.9%	1.3%	-0.8%
1Y	-32.0%	-9.6%	-5.0%

Return vs Industry: SNC underperformed the Canadian Construction industry which returned -9.3% over the past year.

Return vs Market: SNC underperformed the Canadian Market which returned -4.7% over the past year.

Price Volatility

Is SNC's price volatile compared to industry and market?
SNC volatility
SNC Average Weekly Movement	5.7%
Construction Industry Average Movement	4.8%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	17.4%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: SNC is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: SNC's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1911	30,989	Ian Edwards	https://www.snclavalin.com

SNC-Lavalin Group Inc. operates as an integrated professional services and project management company. It operates through Engineering, Design, and Project Management (EDPM); Nuclear; Infrastructure Services; Resources; Infrastructure EPC (Engineering, Procurement, and Construction) Projects; and Capital segments. The EDPM segment provides consultancy, engineering, design, and project management services for the transportation, civil infrastructure, aerospace, defense and security, and technology sectors.

SNC-Lavalin Group Fundamentals Summary

How do SNC-Lavalin Group's earnings and revenue compare to its market cap?
SNC fundamental statistics
Market Cap	CA$3.89b
Earnings (TTM)	CA$57.20m
Revenue (TTM)	CA$7.44b

67.9x

P/E Ratio

0.5x

P/S Ratio

Is SNC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SNC income statement (TTM)
Revenue	CA$7.44b
Cost of Revenue	CA$7.01b
Gross Profit	CA$428.46m
Other Expenses	CA$371.25m
Earnings	CA$57.20m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.33
Gross Margin	5.76%
Net Profit Margin	0.77%
Debt/Equity Ratio	60.1%

How did SNC perform over the long term?

See historical performance and comparison

Dividends

0.4%

Current Dividend Yield

25%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is SNC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SNC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SNC. This is calculated by dividing SNC's market cap by their current preferred multiple.
What is SNC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$3.89b

SNC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.8x
Enterprise Value/EBITDA	15.9x
PEG Ratio	2.3x

Price to Earnings Ratio vs Peers

How does SNC's PE Ratio compare to its peers?

SNC PE Ratio vs Peers

The above table shows the PE ratio for SNC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	18x
WSP WSP Global	35.7x	18.2%	CA$17.2b
ARE Aecon Group	15.8x	24.9%	CA$800.0m
BDT Bird Construction	9.5x	20.8%	CA$401.1m
FTT Finning International	10.9x	11.4%	CA$4.2b
SNC SNC-Lavalin Group	67.9x	30.1%	CA$3.9b

Forward PE

Price-To-Earnings vs Peers: SNC is expensive based on its Price-To-Earnings Ratio (67.9x) compared to the peer average (18x).

Price to Earnings Ratio vs Industry

How does SNC's PE Ratio compare vs other companies in the North American Construction Industry?

Price-To-Earnings vs Industry: SNC is expensive based on its Price-To-Earnings Ratio (67.9x) compared to the North American Construction industry average (23.3x)

Price to Earnings Ratio vs Fair Ratio

What is SNC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SNC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	67.9x
Fair PE Ratio	30.8x

Price-To-Earnings vs Fair Ratio: SNC is expensive based on its Price-To-Earnings Ratio (67.9x) compared to the estimated Fair Price-To-Earnings Ratio (30.8x).

Share Price vs Fair Value

What is the Fair Price of SNC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SNC (CA$22.14) is trading below our estimate of fair value (CA$77.1)

Significantly Below Fair Value: SNC is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: SNC is poor value based on its PEG Ratio (2.3x)

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Future Growth

How is SNC-Lavalin Group forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

30.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SNC's forecast earnings growth (30.1% per year) is above the savings rate (1.6%).

Earnings vs Market: SNC's earnings (30.1% per year) are forecast to grow faster than the Canadian market (6.9% per year).

High Growth Earnings: SNC's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SNC's revenue (1.9% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: SNC's revenue (1.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: SNC's Return on Equity is forecast to be low in 3 years time (10.2%).

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Past Performance

How has SNC-Lavalin Group performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

9.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SNC has a large one-off loss of CA$33.8M impacting its March 31 2022 financial results.

Growing Profit Margin: SNC became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: SNC's earnings have grown by 9% per year over the past 5 years.

Accelerating Growth: SNC has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: SNC has become profitable in the last year, making it difficult to compare its past year earnings growth to the Construction industry (-0.1%).

Return on Equity

High ROE: SNC's Return on Equity (2%) is considered low.

Discover strong past performing companies

Financial Health

How is SNC-Lavalin Group's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SNC's short term assets (CA$3.4B) do not cover its short term liabilities (CA$4.0B).

Long Term Liabilities: SNC's short term assets (CA$3.4B) exceed its long term liabilities (CA$2.6B).

Debt to Equity History and Analysis

Debt Level: SNC's net debt to equity ratio (42.7%) is considered high.

Reducing Debt: SNC's debt to equity ratio has increased from 21.4% to 60.1% over the past 5 years.

Debt Coverage: SNC's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: SNC's interest payments on its debt are not well covered by EBIT (2.1x coverage).

Balance Sheet

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Dividend

What is SNC-Lavalin Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

0.36%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: SNC's dividend (0.36%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: SNC's dividend (0.36%) is low compared to the top 25% of dividend payers in the Canadian market (5.4%).

Stability and Growth of Payments

Stable Dividend: SNC is not paying a notable dividend for the Canadian market, therefore no need to check if payments are stable.

Growing Dividend: SNC is not paying a notable dividend for the Canadian market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: SNC is not paying a notable dividend for the Canadian market.

Cash Payout to Shareholders

Cash Flow Coverage: SNC is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure

CEO

Ian Edwards (59 yo)

3yrs

Tenure

CA$7,629,627

Compensation

Mr. Ian L. Edwards has been President of SNC-Lavalin Group Inc since October 31, 2019 and has been its Chief Executive Officer and Director since June 11, 2019. He was Chief Operating Officer of SNC-Lavali...

CEO Compensation Analysis

Compensation vs Market: Ian's total compensation ($USD5.91M) is above average for companies of similar size in the Canadian market ($USD3.65M).

Compensation vs Earnings: Ian's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: SNC's management team is considered experienced (2.4 years average tenure).

Board Members

Experienced Board: SNC's board of directors are not considered experienced ( 2.1 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: SNC insiders have sold more shares than they have bought in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/01 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31