Stantec Inc. (STN): A Infrastructure Play With Bulletproof Backlog and Strategic Momentum

Stantec Inc. (STN) is emerging as a standout player in the infrastructure sector, fueled by a record-breaking backlog and disciplined acquisitions that are positioning the firm to capitalize on global demand for engineering and design services. With a $7.9 billion backlog—up 12.8% year over year—and a pipeline of accretive deals, Stantec is not just weathering economic headwinds but actively expanding its footprint in high-growth markets. Investors seeking stability in a volatile market should take note: this is a company primed to deliver outsized returns through 2025 and beyond.

The Backlog: A Crystal Ball for Future Revenue

Stantec’s Q1 2025 results are a masterclass in operational resilience. Its record $7.9 billion backlog represents approximately 12 months of work, with organic growth contributing 7.5% to the total. This figure is no mere accounting gimmick—it’s a leading indicator of revenue visibility. The company’s backlog has grown at a compound annual rate of 8% over the past three years, but the current 12.8% YoY jump marks an acceleration, signaling strong demand across all regions.

Even in the U.S., where organic growth was muted at 2.1% year to date, management remains confident in mid-to-high single-digit full-year growth. The key here is the backlog’s composition: it’s not just large, but diversified. The Canada segment grew 3.9% organically to $1.75 billion, while the Global segment (excluding the U.S. and Canada) dipped slightly due to foreign exchange headwinds but remains robust at $1.38 billion. This geographic spread reduces reliance on any single market, a critical differentiator in today’s uncertain macro environment.

Acquisitions: Fueling Margin Expansion and Market Dominance

Stantec’s strategy isn’t just about organic growth—it’s about acquiring capabilities that amplify its value proposition. The April 2025 acquisitions of Page and Ryan Hanley are textbook examples of accretive M&A.

• Page (U.S.): This $1.4 billion deal (estimated based on revenue multiples) transforms Stantec into the second-largest architectural firm in the U.S., instantly boosting its expertise in high-margin sectors like advanced manufacturing, data centers, and healthcare facilities. Page’s 1,400 employees also expand Stantec’s reach into mission-critical markets, from cleanroom design to aviation infrastructure.
• Ryan Hanley (Ireland): A 150-person engineering firm, this acquisition strengthens Stantec’s foothold in Ireland’s water management sector—a strategic priority as European governments ramp up spending on sustainable infrastructure.

Combined, these deals add over 1,500 employees in 2025, directly supporting Stantec’s 2024–2026 strategic plan. Importantly, the 2025 guidance excludes these acquisitions’ contributions, suggesting significant upside potential. While integration challenges remain (e.g., ZETCON’s language barriers in Germany), Stantec’s track record of post-merger synergies—seen in past deals like Atkins and Haley & Aldrich—gives investors confidence.

The numbers don’t lie: Stantec’s adjusted EBITDA margin rose to 16.2% in Q1 2025, up 70 basis points from 15.5% in 2024. This improvement underscores management’s focus on operational discipline. Meanwhile, operating cash flow surged 136% year over year to $101 million, a clear sign that Stantec is converting top-line growth into liquidity.

Why Buy Now? Valuation and Catalysts

At current levels, Stantec trades at just 10.2x 2025E EBITDA—a discount to peers like AECOM (ACM) at 11.8x and Tetra Tech (TTEK) at 12.5x. This valuation gap is puzzling given Stantec’s superior backlog visibility and strategic execution.

The catalysts are clear:
1. Backlog Conversion: With $7.9 billion in contracted work, Stantec is poised to deliver on its 2025 net revenue growth targets of 7–10%.
2. Upside from Acquisitions: The Page and Ryan Hanley deals are accretive to margins and open new revenue streams, potentially pushing guidance higher.
3. Infrastructure Spend Cycles: Governments globally are prioritizing infrastructure projects—Stantec’s expertise in water, energy, and urban planning positions it to capture this spending.

Risks and Mitigations

No investment is without risk. Stantec faces headwinds like U.S. project delays, regulatory shifts, and currency volatility. However, its diversified backlog, strong cash flow, and track record of executing on M&A mitigate these risks. Even the ZETCON integration challenges in Germany are isolated and manageable, given the scale of the business.

Conclusion: A Buy at These Levels

Stantec is a rare combination of organic momentum and strategic acumen. Its record backlog, accretive acquisitions, and margin expansion make it a compelling buy at today’s valuation. With infrastructure spending set to surge and Stantec’s execution proving its staying power, investors who act now could reap rewards as the company converts its backlog into profits—and its acquisitions into market dominance.

The time to act is now: Stantec’s fundamentals are firing on all cylinders, and the stock’s current price offers a rare entry point into an infrastructure leader with global ambitions.