Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Stantec Inc (TSX: STN) is a sustainable engineering, architecture, and environmental consulting company. The company is geographically diversified in three regional operating units namely Canada, the United States and Global, offering similar services across all regions. The company offers services in various sectors across the project life cycle through five business operating units - infrastructure, water, buildings, environmental services, and energy and resources.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~38.26% of the total shareholding. Mackenzie Financial Corporation and Jarislowsky Fraser, Ltd. hold a maximum stake in the company at ~­­­12.18% and ~8.98%, respectively.

1.4 Key Metrics:

On a sequential basis, the firm has seen resilient top and bottom-line growth over the last three quarters, which is a significant plus. Furthermore, its segment revenue is increasing. Furthermore, the company's operating margins are rising in comparison to the previous quarter, and these margins are higher than the industry median. The company also managed to continuously build its order backlog, demonstrating its strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as an update on upcoming Q3 2022, financial results, acquisition and getting contract from U.S. Navy and NAVFAC.

2.2 Insights of Q2 2022 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 17, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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