RBC Capital Markets' Continued Optimism on Stantec: Is This the Right Time to Buy?

The post-pandemic infrastructure boom has reshaped global priorities, with aging systems, climate resilience, and energy transitions driving unprecedented demand for engineering and design expertise. At the forefront of this transformation is Stantec (NYSE: STN), a firm that has consistently outperformed expectations while aligning its strategic vision with long-term secular trends. RBC Capital Markets' recent analysis reaffirms its “Buy” rating for Stantec, citing the company's disciplined execution, robust financials, and strategic positioning in high-growth sectors. But is now the right time to act on this optimism?

Strategic Growth: From Megaprojects to Sustainable Design

Stantec's evolution into a global leader in sustainable infrastructure is no accident. The company's 2025 strategic acquisitions—Page in Washington, D.C., Ryan Hanley in Ireland, and Cosgroves in New Zealand—have expanded its footprint in critical areas like healthcare, data centers, and water management. These moves are not just about scale; they reflect a calculated response to macro trends. For instance, the EU's $750 billion green recovery fund and the U.S. Navy's $150 million shipyard optimization program underscore a shift toward climate-resilient and mission-critical infrastructure. Stantec's expertise in these domains positions it to capture value as governments and corporations prioritize sustainability.

The company's Q2 2025 results further validate this strategy. Revenue surged 35.59% year-over-year to $1.6 billion, with organic growth of 4.8% and EBITDA margins expanding to 17.8%. A $7.9 billion contract backlog—up 9.9% year-over-year—provides visibility into future cash flows, with 12 months of work secured. This backlog is not just a number; it represents projects in sectors like water (12.4% organic growth) and energy transition (9.5% organic growth), both of which are central to global infrastructure agendas.

Institutional Backing and Financial Discipline

RBC Capital Markets' confidence in Stantec is rooted in its ability to balance growth with financial prudence. The firm's net debt-to-EBITDA ratio of 1.1x and a 7.45% dividend growth rate over 14 years highlight its commitment to shareholder returns. Analyst Sabahat Khan notes that Stantec's “disciplined M&A” and margin expansion—driven by cost management and project execution—set it apart in a competitive sector.

Despite these strengths, Stantec's stock has faced short-term volatility. Following its Q2 earnings release, shares fell 3.92% in regular trading and an additional 10.61% premarket. This selloff, however, appears disconnected from fundamentals. The company raised full-year guidance to 10–12% revenue growth and 18.5–21.5% adjusted EPS growth, signaling confidence in its trajectory. For investors, this divergence between performance and sentiment could represent a buying opportunity.

ESG Alignment and Long-Term Tailwinds

Stantec's focus on ESG-driven projects is a key differentiator. Its work on water infrastructure, for example, aligns with EU climate resilience goals and the U.S. Infrastructure Investment and Jobs Act. The firm's recent acquisition of Ryan Hanley, a specialist in environmental permitting, further strengthens its ability to navigate regulatory complexities in green projects.

RBC's analysis also highlights Stantec's exposure to energy transition. With global grids modernizing and renewable energy adoption accelerating, the company's expertise in sustainable design—from solar farms to smart cities—positions it to benefit from multi-decade trends. This is not cyclical growth; it's structural.

Investment Thesis: A Compelling Near-Term Buy

For investors seeking exposure to the infrastructure boom, Stantec offers a compelling risk-reward profile. Its strong balance sheet, growing backlog, and alignment with ESG priorities provide a buffer against macroeconomic headwinds. RBC's price target of C$150 implies a 25% upside from current levels, factoring in its 2025 guidance and strategic momentum.

However, risks remain. A U.S. market slowdown or delays in EU green projects could pressure margins. Yet, Stantec's diversified geographic and sector presence—spanning North America, Europe, and Asia—mitigates this risk. The company's ability to execute high-margin projects, as evidenced by its 12.5%+ adjusted ROIC target, further strengthens its case.

Conclusion

Stantec's strategic positioning in the post-pandemic infrastructure landscape is both timely and enduring. While short-term volatility may test patience, the company's financial discipline, institutional backing, and alignment with global megatrends make it a standout play. For investors with a medium-term horizon, the current valuation offers an attractive entry point to capitalize on a firm that is not just riding the infrastructure wave but helping to shape it.