Stantec's Backlog Surge Points to Revenue Acceleration Ahead

Stantec STN is positioning itself for a strong growth trajectory, with rising backlog figures serving as the clearest signal yet. Across all three geographic segments — U.S., Canada, and Global — the company has reported healthy year-over-year increases in backlog, offering high visibility into near-term revenue gains and multi-year momentum.

In the United States, a 12.6% increase pushed backlog to $4.8 billion, bolstered by expectations for new water projects beginning in the second quarter of 2025. Although first-quarter organic growth came in at a modest 2.4% due to project timing issues, management flagged a pipeline poised to accelerate. With infrastructure sentiment improving and policy uncertainty easing, Stantec is now well-positioned to benefit from a $9.1 trillion infrastructure funding gap recently highlighted by the American Society of Civil Engineers.

Canada’s infrastructure push also supports a favorable backdrop. Federal initiatives in energy, housing, and healthcare are contributing to robust project pipelines, particularly in wastewater and high-intensity industrial segments. Transit and airport-related work is also gaining momentum, setting up a solid growth runway.

Meanwhile, the Global segment is showing similar promise. The U.K.’s AMP8 program launched in April with 75% more funding than the previous cycle. Stantec has already ramped up capacity to capture demand, which should convert into order flow. Australia and New Zealand remain steady performers in water, thanks to framework agreements, and Germany’s €500 billion infrastructure fund positions Stantec for broader market penetration.

STN vs Peers: Price Performance, Valuation

Stantec has delivered an impressive 42% year-to-date gain, sharply outperforming the industry’s 3% decline. In contrast, U.S. peers have seen mixed results: Tetra Tech TTEK is down 8%, while AECOM ACM has surged 6%.

Stantec appears richly valued, especially when compared with Tetra Tech and AECOM. Trading at a 27.02 forward 12-month Price/Earnings (P/E) ratio, it is above its five-year median forward P/E of 23.74. Tetra Tech trades at 24.54X forward P/E, while AECOM trades even lower at 20.17X.

The Zacks Consensus Estimate for STN’s 2025 earnings has been on the rise over the past 60 days.

STN stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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