WSP Global: A High-Growth Engineering Giant with Analysts' Full Throttle Approval

WSP Global (TSE:WSP) is firing on all cylinders, delivering record revenues, robust earnings growth, and a consensus “Strong Buy” rating from analysts. Despite a P/E ratio of 50.3—elevated by strong growth expectations—the stock presents a compelling long-term opportunity for investors seeking exposure to a global engineering leader with a fortress-like backlog and strategic momentum. Let's unpack why this is a buy now, not later.

EPS Growth: Fueling the Engine of Value

WSP's first-quarter 2025 results underscore its ability to scale earnings while navigating macroeconomic headwinds. Adjusted EPS surged 18.2% year-over-year to $1.76, driven by a 22.4% revenue jump to $4.39 billion and a record backlog of $16.6 billion (up 16.6% from 2024). This backlog—a pipeline of contracted work—now represents 11.3 months of future revenue, a testament to the company's dominance in sectors like infrastructure, sustainability, and energy transition.

The P/E ratio, while high, reflects investor confidence in WSP's ability to sustain this trajectory. With full-year 2025 EPS estimates at $9.30 (15.56% growth), the stock is pricing in sustained outperformance. Analysts at BMO Capital and TD Securities recently raised price targets to C$298 and C$307, respectively, signaling that growth is far from tapped out.

Dividend Yield: A Steady Beat in a Volatile World

While the 0.54% dividend yield may seem modest, it's a deliberate reflection of WSP's cash-generation prowess and strategic reinvestment. The quarterly dividend of $0.375 per share (totaling C$48.9 million in Q1) is funded by a free cash inflow of C$115.9 million, a dramatic turnaround from a C$125.2 million outflow in 2024. This dividend policy isn't about immediate income—it's about signaling confidence.

The yield isn't the headline here; it's the stability and scalability of cash flows that matter. With a net debt-to-EBITDA ratio of 1.8x (well within management's target range), WSP has the flexibility to invest in growth while maintaining shareholder returns.

Analyst Sentiment: A Full-Throttle Rally

Analysts are unequivocal: WSP is a buy. Out of seven analysts covering the stock, all rate it “Buy” or higher, with none suggesting a “Hold” or “Sell.” The average 12-month price target of C$298 implies an 8.13% upside from current levels, while TD Securities' aggressive C$307 target suggests 11.39% upside.

This consensus isn't arbitrary. It's rooted in WSP's execution:
- Backlog growth provides a “moat” against economic uncertainty.
- Margin resilience (16.0% EBITDA margin despite integration costs) highlights operational discipline.
- Strategic acquisitions, like POWER Engineers, are driving cross-selling opportunities and backlog expansion.

Why the High P/E Isn't a Red Flag

Critics may cite the P/E ratio as a warning, but this overlooks two critical factors:
1. Growth premium: WSP's backlog and revenue growth justify a premium valuation. A P/E of 50 is high, but if earnings rise to $9.30 in 2025 and beyond, the ratio will normalize.
2. Free cash flow acceleration: The trailing twelve-month free cash flow of C$1.126 billion (1.6x net earnings) supports the stock's valuation and provides a cushion for unexpected headwinds.

The Bottom Line: Act Now or Miss the Takeoff

WSP is a rare blend of scale, diversification, and execution in the engineering and design space. With analysts unanimously bullish, a backlog that ensures visibility for over nine months, and a management team focused on disciplined growth, this stock is primed for a multiyear ascent.

The high P/E ratio is a price worth paying for investors who recognize that WSP isn't just a cyclical play—it's a structural winner in the global shift toward sustainable infrastructure and energy transition.

Invest now, or risk missing the rally.