Aecon and Stantec Report

This week Aecon and Stantec reported quarterly results. These are 2 companies that I follow quite closely. In a nutshell Aecon came in worse than expectations and Stantec was also slightly worse than expectations. Here is a quick summary:

1) Aecon reported revenue up 17% to $567 million CDN. However they came in with an operating loss worse than expected at $31.1 million CDN. Usully construction companies do poorly in the winter - Aecon is no exception but this quarter they had losses steming from a one time charge to a specific project. The loss translates to $0.53 (March 31 2013) which compares with a loss in 2012 of $0.33 (March 31 2012). Perhaps more worrisome was the drop in the order backlog - overall backlog dropped to $2.1 billion CDN from $2.4 billion CDN in March 2012. In recent quarters the backlog seems to peaking out and coming down. Obviously this might mean lower revenue and profits in coming quarters. As a result the stock has sold off a bit in the last couple of days. In the interest of full disclosure I am long the stock. I intend to remain long for the foreseeable future.

In summary this is a good company but often provides "lumpy" results. In the previous quarter they beat expectation by a wide margin. In this quarter they appear to have muffed up a bit.

2) Stantec reported very solid results with quarterly revenue up almost 18% to $513.2 million CDN. Net income was up 13.6% to $28.4 million CDN. Earnings per share (diluted) came in at $0.61 versus $0.55 a year ago. Under normal circumstances I would consider this to be a good result (and it is) but it probably fell short of expectations. The stock is off a bit in the last 24 hours. I am NOT a current shareholder but have been in the past. As I have mentioned in another post I believe some Lavalin portfolio money has come over to Stantec and driven the stock to a relatively high valuation. I am following the stock and looking for a decent buy in point. The forecasted EPS is $2.90 approximately giving a forward P/E of about 15 - it just seems a bit optimistic to me. I would like to see a P/E of about 13 before buying.