LOS ANGELES - Stantec (NYSE:STN), a global design and engineering firm, has been chosen by the Los Angeles Department of Water & Power (LADWP) for a five-year master services agreement worth US$104 million. The contract involves upgrading and modernizing the electrical infrastructure in greater Los Angeles as part of LADWP's Power System Reliability Program (PSRP).
Under the agreement, Stantec will act as one of the Owner's Representatives, offering a range of services including transmission planning studies, reliability assessments, distributed energy resources studies, and economic and impact evaluations. They will also provide consulting for construction, maintenance, and safety, among other services.
The initiative is set to address the aging infrastructure and assist LADWP in advancing the clean energy transition. Stantec's scope of work also encompasses planning and feasibility studies for renewable resources, as well as assessments of best practices for managing LADWP's power supply.
This engagement with LADWP follows Stantec's earlier CAD$186-million agreement with BC Hydro in Canada, and its role in the SunZia Transmission Project, which is part of a significant clean energy infrastructure initiative in the US.
Stantec, recognized for its power delivery services, supports various projects involving generation, transmission, substations, distribution, energy storage, and grid modernization. The firm emphasizes its commitment to integrating renewable energy sources into the grid and contributing to a lower carbon future.
This news is based on a press release statement and reflects Stantec's ongoing efforts to support the energy transition and infrastructure modernization. The company's involvement in large-scale projects highlights the growing trend of upgrading energy systems to accommodate renewable energy solutions while maintaining reliability and safety standards.
In other recent news, Stantec Inc ., a global design and consulting firm, reported a record net revenue of $1.5 billion in the second quarter of 2024, marking a 17% increase from the same period last year. This growth was especially prominent in its Water and Buildings businesses, with both U.S. and Canadian operations seeing a 16% rise in net revenue. Furthermore, the firm's backlog reached an all-time high at $7.2 billion.
Stantec also introduced Vito Culmone as the new Executive Vice President and future Chief Financial Officer, whose tenure begins on September 3rd. The company reaffirmed its financial targets for 2024, projecting net revenue growth between 12% to 15% and mid-to-high single-digit organic growth.
Despite concerns about delays in project awards and lower gross margin in Canada, Stantec maintains a positive outlook, with a strong U.S. backlog and the ability to charge higher fees due to a solid demand environment. The company is also actively pursuing acquisition opportunities in various geographies, particularly in Germany through the acquisition of ZETCON. These recent developments indicate a strategic direction towards continued growth and expansion.
InvestingPro Insights
Stantec's recent agreement with the Los Angeles Department of Water & Power not only underscores its expanding role in modernizing energy infrastructure but also aligns with its financial trajectory and market performance. InvestingPro data reveals that Stantec has a market capitalization of $9.26 billion, reflecting its substantial presence in the engineering and design sector. The company's commitment to dividend growth is notable, with a track record of increasing its dividend for 13 consecutive years, a testament to its financial stability and shareholder value focus.
InvestingPro Tips highlight Stantec's impressive gross profit margins, which stood at 54.31% over the last twelve months as of Q2 2024. This indicates the company's efficiency in managing its cost of goods sold and its ability to retain earnings after covering direct costs. Additionally, Stantec's stock generally trades with low price volatility, suggesting that its share price remains relatively stable amidst market fluctuations, which could be attractive to investors seeking less risky assets.
Moreover, the company's revenue growth of 13.02% over the last twelve months as of Q2 2024 indicates a healthy expansion of its business operations. With a P/E ratio of 36.77, Stantec is trading at a high earnings multiple, which may reflect investor confidence in its future earnings potential. However, it's worth noting that analysts have revised their earnings downwards for the upcoming period, which could impact future valuations.
For readers interested in further analysis and metrics, there are 14 additional InvestingPro Tips available for Stantec at https://www.investing.com/pro/STN, providing deeper insights into the company's financial health and stock performance.
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