Stantec (NYSE: STN) and Tetra Tech (NASDAQ:TTEK) are both mid-cap business services companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, risk, valuation, dividends, earnings and analyst recommendations.
Stantec pays an annual dividend of $0.43 per share and has a dividend yield of 1.7%. Tetra Tech pays an annual dividend of $0.48 per share and has a dividend yield of 0.8%. Stantec pays out 31.6% of its earnings in the form of a dividend. Tetra Tech pays out 22.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Stantec has increased its dividend for 5 consecutive years. Stantec is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
56.3% of Stantec shares are owned by institutional investors. Comparatively, 85.0% of Tetra Tech shares are owned by institutional investors. 3.4% of Tetra Tech shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Stantec and Tetra Tech’s top-line revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
Tetra Tech has lower revenue, but higher earnings than Stantec. Stantec is trading at a lower price-to-earnings ratio than Tetra Tech, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Stantec and Tetra Tech, as provided by MarketBeat.com.
||Strong Buy Ratings
Stantec presently has a consensus price target of $40.00, indicating a potential upside of 57.17%. Tetra Tech has a consensus price target of $56.40, indicating a potential downside of 1.83%. Given Stantec’s higher probable upside, equities research analysts clearly believe Stantec is more favorable than Tetra Tech.
This table compares Stantec and Tetra Tech’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Risk & Volatility
Stantec has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500. Comparatively, Tetra Tech has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.
Tetra Tech beats Stantec on 12 of the 17 factors compared between the two stocks.
Stantec Company Profile
Stantec Inc. provides professional consulting services in the area of infrastructure and facilities for clients in the public and private sectors in Canada, the United States, and internationally. It operates through four segments: Consulting Services ? Canada, Consulting Services ? United States, Consulting Services ? Global, and Construction Services. The company offers consulting services in engineering, architecture, interior design, landscape architecture, surveying, environmental services, project management, and project economics. It also provides construction, construction management, and project delivery at-risk services primarily on water-related projects, as well as professional supervision services to various clients in the United States and the United Kingdom. The company was formerly known as Stanley Technology Group Inc. and changed its name to Stantec Inc. in October 1998. Stantec Inc. was founded in 1954 and is headquartered in Edmonton, Canada.
Tetra Tech Company Profile
Tetra Tech, Inc. provides consulting and engineering services worldwide. It operates through two segments, Water, Environment and Infrastructure (WEI); and Resource Management and Energy (RME). The WEI segment offers early data collection and monitoring, data analysis and information technology, science and engineering applied research, engineering design, construction management, and operations and maintenance services; and climate change and energy management consulting, as well as greenhouse gas inventory assessment, certification, reduction, and management services. It serves governments, and commercial and industrial clients in water resources analysis and water management, environmental restoration, government consulting, and civil infrastructure master planning and engineering design markets. The RME segment provides early data collection and monitoring, data analysis and information technology, feasibility studies and assessments, science and engineering applied research, engineering design, construction management, and operations and maintenance services. This segment serves industrial and commercial clients, U.S. federal agencies in large scale remediation, and international development agencies in natural resources, energy, remediation, waste management, utilities, and international development markets. Tetra Tech, Inc. was founded in 1966 and is headquartered in Pasadena, California.
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