Infrastructure, sustainability, and urban development are long-term investment themes that require specialized expertise. One Canadian company has positioned itself at the center of these trends, delivering engineering, architecture, and consulting services that help governments and corporations adapt to climate change, modernize infrastructure, and manage resources responsibly. With a diversified portfolio and strong project backlog, this business is well-placed to capture steady growth in the coming years.
Building the Foundations of Tomorrow
Stantec (STN.TO) is a global engineering and design firm that provides sustainable solutions across multiple industries. Its business model spans five major operating units: Infrastructure, Water, Buildings, Environmental Services, and Energy & Resources. This diversified structure enables Stantec to balance revenue between government contracts, private sector projects, and recurring environmental consulting.
The company operates in three geographic segments—Canada, the U.S., and Global markets. Its top 25 clients are highly engaged, with more than half using services from at least four of its business units. This multi-service approach creates strong client retention and cross-selling opportunities. Stantec covers the full project life cycle: from concept and planning to design, construction management, and even remediation and decommissioning.
The Bull Case: Riding the Infrastructure Wave
Stantec is in an enviable position as one of the world’s leading engineering and consulting firms, with exposure to some of the strongest long-term demand drivers in the industry.
Playbook
The company focuses on government infrastructure contracts and private sector capital projects. Its business mix reduces volatility compared to firms that rely heavily on cyclical sectors like mining or oil and gas. With a $7.9B backlog—equivalent to roughly 13 months of work—Stantec enjoys strong revenue visibility.
Growth Vectors
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Government Infrastructure Spending: In both the U.S. and Canada, government programs are allocating billions toward modernizing transportation, energy grids, and water systems.
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Water Segment Strength: Backlog in Water grew 24% YoY, reflecting rising demand for clean water and wastewater management solutions.
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Strategic Acquisitions: Stantec continues to use M&A to broaden expertise and geographic reach. With an under-leveraged balance sheet, it has flexibility for future deals.
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Energy Transition Projects: Increasing demand for renewable energy and carbon reduction strategies has created new growth avenues.
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Geographic Diversification: With about half its revenue from the U.S., one-quarter from Canada, and the rest international, Stantec is not overly reliant on any single region.
Economic Moat
Stantec’s moat lies in its diversified expertise, strong client retention, and international presence. Its ability to provide integrated solutions across sectors makes it a trusted long-term partner. While margins are pressured by competition, its backlog and breadth of services offer resilience compared to smaller peers.
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The Bear Case: Cycles, Talent, and Competition
Despite its strengths, Stantec faces risks tied to its cyclical industry, dependence on skilled labor, and a competitive marketplace.
Business Vulnerabilities
Stantec relies on government budgets and private sector investments. In an economic downturn, project approvals could be delayed, reducing growth. Its historical performance between 2017 and 2022 was uneven, reflecting how cycles affect consulting firms.
Industry & Market Threats
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Talent Shortages: Engineering and environmental consulting are labor-intensive. Wage inflation and retention challenges could erode margins.
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Acquisition Risks: While acquisitions are a growth driver, overpaying or poor integration could dilute shareholder value.
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Cyclical Nature: Stantec’s revenue growth is closely tied to macroeconomic trends in infrastructure and construction.
Competitive Landscape
Stantec competes with global heavyweights such as WSP Global and Tetra Tech, along with numerous regional firms. WSP, with roughly double the market cap and revenue, benefits from greater scale and financial flexibility. This puts pressure on Stantec to remain competitive on both pricing and acquisitions.
What’s New: Strong Quarter Highlights Water
On August 19, 2025, Stantec delivered a solid quarter:
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Revenue up 7% YoY, including 4.8% organic growth.
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EPS up 21%, supported by higher project margins and lower administrative expenses.
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Regional Growth: U.S. +5.7%, Canada +6.2%, Global +10.5%.
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Water Segment Strength: Continued double-digit organic growth, confirming robust demand.
The results reinforce management’s optimism, as Stantec raised its 2025 and 2026 earnings estimates.
The Dividend Triangle in Action: Steady Climb
Looking at the Dividend Triangle:
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Revenue has grown steadily, reaching $7.8B.
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EPS has accelerated, now at $3.83.
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Dividend growth, while modest, has been consistent, with the payout now at $0.225 per share.
Stantec’s dividend yield remains on the low side, but its strength lies in sustained growth potential and strong earnings momentum to support future increases.
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Final Thoughts: A Reliable Builder in Any Market
Stantec’s diversified service portfolio, strong backlog, and alignment with secular trends like climate adaptation, clean water, and infrastructure modernization make it a compelling pick in the engineering and consulting space. While competition and talent risks are worth monitoring, its growth trajectory appears well supported. For long-term investors, Stantec represents a steady growth-and-income story in a critical industry.
