Stantec’s Q1 2025 Surge: Why Infrastructure Investors Should Act Now

In a quarter marked by geopolitical volatility and economic uncertainty, Stantec (NYSE: STN) delivered a performance that defied expectations. With record revenue, margin expansion, and two transformative acquisitions, the firm has positioned itself as a leader in the global infrastructure renaissance. For investors, this is a buy signal—a rare opportunity to capitalize on compounding advantages in a sector primed for growth. Let’s dissect why Stantec’s Q1 2025 results signal a compelling long position.

The Foundation: Organic Growth and Margin Discipline

Stantec’s Q1 2025 net revenue of $1.6 billion surged 13.3% year-over-year, with 5.9% organic growth proving the engine behind its success. This outperformance isn’t a fluke: the company’s focus on high-margin sectors like water infrastructure and asset management has driven a 70 basis-point expansion in adjusted EBITDA margins to 16.2%, even as it integrated new teams. The $252.3 million adjusted EBITDA—up 19.1%—is a testament to cost discipline and project execution excellence.

This margin resilience isn’t just a short-term blip. Stantec’s 2025 guidance of 16.7–17.3% margins suggests further upside, driven by geographic scale efficiencies and operational leverage.

The Catalyst: Strategic Acquisitions Amplify Growth

Stantec’s Q1 wasn’t just about organic momentum—it was about strategic scale. The acquisitions of Ryan Hanley (Ireland) and Page (U.S.) add over 1,550 employees, but their true value lies in the markets they unlock.

• Ryan Hanley: A 150-person Irish consultancy specializing in water infrastructure and environmental projects. This move cements Stantec’s position as a European water sector powerhouse, a sector expected to grow 6–8% annually through 2030 as climate resilience spending accelerates.
• Page: A 1,400-person U.S. architecture firm with expertise in advanced manufacturing, healthcare, and data centers. Post-acquisition, Stantec becomes the second-largest architecture firm in the U.S., a title that opens doors to high-margin design contracts and long-term client relationships.

These acquisitions are not bolt-ons—they’re growth accelerants. Combined, they add $180–200 million in annual revenue potential and expand Stantec’s addressable market by over 20%, according to internal estimates.

The Safety Net: A $7.9 Billion Backlog and Cash Flow Dominance

Stantec’s $7.9 billion backlog—up 12.8% year-over-year—is a fortress of future revenue. This represents 12 months of contracted work, with 7.5% organic growth across all regions. Canada’s 12.2% organic surge highlights the firm’s ability to capitalize on government spending, while the U.S. and Global segments reflect demand for data centers, clean energy, and urban development.

Even more compelling: Stantec’s operating cash flow surged 135.8% to $100.7 million, with a net debt-to-EBITDA ratio of 1.1x—well within its 1.0x–2.0x target. This financial flexibility allows it to fund acquisitions without over-leveraging, shielding investors from balance-sheet risk.

The Undervalued Opportunity: Why STN is a Bargain at Current Levels

Despite its Q1 outperformance, Stantec trades at a 12.3x forward EV/EBITDA multiple, below its five-year average of 14.5x. This discount ignores two critical facts:

1. 2025 Guidance is Conservative: The company’s 7–10% revenue growth and 16–19% adjusted EPS growth targets exclude contributions from the Page and Ryan Hanley deals. If integrated by mid-2025, these could add 5–7% to annual revenue, pushing metrics toward the high end of guidance.
2. Margin Leverage is Underappreciated: Stantec’s 16.2% EBITDA margin already exceeds its 2025 target range. With $100+ million in operating cash flow and a backlog-driven revenue runway, further margin expansion (to 17%+) is achievable, amplifying EPS upside.

At current prices, the market is pricing in minimal upside from these catalysts. For investors, this is a gap to exploit.

Risks, but Manageable

• Acquisition Integration: While Page and Ryan Hanley are strategic, execution risks exist. However, Stantec’s track record of 90%+ acquisition accretion since 2018 gives confidence.
• Economic Downturn: Infrastructure spending is recession-resistant, especially in water and public transit. Stantec’s diversified client base (30% public sector, 70% private) mitigates sector-specific risks.

Conclusion: Act Now—The Compounding Machine is Firing on All Cylinders

Stantec’s Q1 2025 results are a masterclass in execution. With organic growth, margin discipline, and strategic M&A, the firm has created a self-reinforcing cycle: backlog fuels revenue, revenue funds acquisitions, and acquisitions expand margins and market share.

For investors, this is a buy-and-hold opportunity. The stock’s undervaluation relative to 2025 guidance, combined with its backlog-backed visibility, makes it a rare blend of near-term catalysts (margin upside) and long-term compounding (market share gains).

The question isn’t whether to buy—it’s why you’re waiting. Stantec’s train has left the station. Jump on board before the market catches up.

Actionable Takeaway: Stantec (STN) is a buy at current levels. Monitor for the Page acquisition’s closing (expected Q2 2025) and a potential dividend hike (current yield: 1.2%). Hold for 12–18 months to capture the full impact of its strategic momentum.