Analyzing ENGlobal (ENG) & Stantec (STN)

ENGlobal (NASDAQ:ENG) and Stantec (NYSE:STN) are both construction companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitability, analyst recommendations, earnings, dividends and risk.

Volatility & Risk

ENGlobal has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500. Comparatively, Stantec has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Dividends

Stantec pays an annual dividend of $0.41 per share and has a dividend yield of 1.7%. ENGlobal does not pay a dividend. Stantec pays out 30.1% of its earnings in the form of a dividend. Stantec has raised its dividend for 6 consecutive years.

Profitability

This table compares ENGlobal and Stantec’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ENGlobal -8.47% -22.48% -16.69%
Stantec 1.34% 9.47% 4.54%

Institutional and Insider Ownership

13.9% of ENGlobal shares are owned by institutional investors. Comparatively, 64.5% of Stantec shares are owned by institutional investors. 37.7% of ENGlobal shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares ENGlobal and Stantec’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ENGlobal $55.76 million 0.37 -$16.25 million N/A N/A
Stantec $3.96 billion 0.68 $74.82 million $1.36 17.44

Stantec has higher revenue and earnings than ENGlobal.

Analyst Recommendations

This is a summary of current ratings and price targets for ENGlobal and Stantec, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ENGlobal 0 0 0 0 N/A
Stantec 0 2 4 0 2.67

Stantec has a consensus target price of $35.50, indicating a potential upside of 49.66%. Given Stantec’s higher probable upside, analysts plainly believe Stantec is more favorable than ENGlobal.

Summary

Stantec beats ENGlobal on 11 of the 14 factors compared between the two stocks.

About ENGlobal

ENGlobal Corporation provides engineering and professional services primarily to the energy industry in the United States and internationally. The company operates through two segments, Engineering, Procurement and Construction Management (EPCM); and Automation. The EPCM segment offers services relating to the development, management, and execution of projects requiring professional engineering and related project management services primarily to the energy industry, which include conceptual studies, project definition, cost estimating, engineering design, environmental compliance, material procurement, project management, and construction management. The Automation segment provides services related to the design, fabrication, and implementation of process distributed control and analyzer systems, advanced automated data gathering systems, information technology, and electrical projects; and designs, assembles, integrates, and services control and instrumentation systems for applications in the energy and processing related industries. It serves petroleum refining, petrochemical, pipeline, production, process, and pulp and paper industries. In addition, this segment offers electrical and instrument installation, technical, maintenance and calibration, and repair services to government agencies, refineries, and petrochemical and process industries. ENGlobal Corporation was founded in 1985 and is headquartered in Houston, Texas.

About Stantec

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.

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