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- Revenue increased 11.8% Y/Y, of which 3.7% was organic, mainly on continued oil & gas sector strength. Diluted EPS rose 20.5% Y/Y, dividend unchanged sequentially but up 7% Y/Y.
- My thesis is only one month long but already shows signs of strength as STN posted very solid quarterly results and its stock gained over 2% in a month.
- I confirm my long STN thesis and see it reaching a target price of $76.5 within a year, proving an ~18% upside and further 10% to 15% per year afterwards.
- Past organic and acquisition-driven growth at a total 18% annual rate will continue, albeit at a slower ~10% rate.
- Forward valuations had almost a year to catch up with the past price growth, offering an excellent entry with expected ~10% to 15% annual price gains.
- The stock is ~22% undervalued. Continued oil-and-gas-segment strength, organic growth and re-accelerated acquisitions provide near-term catalysts.
- International sales are very low but showing the fastest organic growth. Still acquisitions now correctly focus on the biggest near-term opportunity – the U.S.
- Cyclical nature of sales and dependency on the North American region and the oil and gas industry pose a downside risk in case of a slowdown.