At CA$103, Is Stantec Inc. (TSE:STN) Worth Looking At Closely?

While Stantec Inc. (TSE:STN) might not be the most widely known stock at the moment, it led the TSX gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Stantec’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Stantec

Is Stantec Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.4% below my intrinsic value, which means if you buy Stantec today, you’d be paying a fair price for it. And if you believe that the stock is really worth CA$111.00, then there’s not much of an upside to gain from mispricing. In addition to this, Stantec has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Stantec generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 71% over the next couple of years, the future seems bright for Stantec. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in STN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on STN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Stantec, you'd also look into what risks it is currently facing. For example - Stantec has 2 warning signs we think you should be aware of.

If you are no longer interested in Stantec, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.