Analyzing AECOM (NYSE:ACM) and Stantec (NYSE:STN)

AECOM (NYSE:ACM) and Stantec (NYSE:STN) are both mid-cap industrials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Dividends

AECOM pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Stantec pays an annual dividend of $0.71 per share and has a dividend yield of 0.9%. AECOM pays out 56.9% of its earnings in the form of a dividend. Stantec pays out 22.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AECOM has increased its dividend for 3 consecutive years and Stantec has increased its dividend for 13 consecutive years.

Risk & Volatility

AECOM has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Stantec has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Institutional and Insider Ownership

85.4% of AECOM shares are owned by institutional investors. Comparatively, 63.9% of Stantec shares are owned by institutional investors. 0.5% of AECOM shares are owned by insiders. Comparatively, 0.5% of Stantec shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares AECOM and Stantec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AECOM	1.87%	19.72%	4.10%
Stantec	5.91%	19.70%	8.07%

Analyst Ratings

This is a breakdown of current ratings for AECOM and Stantec, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AECOM	1	3	8	0	2.58
Stantec	0	2	5	0	2.71

AECOM currently has a consensus price target of $80.73, indicating a potential upside of 22.26%. Stantec has a consensus price target of $175.00, indicating a potential upside of 133.77%. Given Stantec’s stronger consensus rating and higher probable upside, analysts clearly believe Stantec is more favorable than AECOM.

Earnings & Valuation

This table compares AECOM and Stantec”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AECOM	$15.39 billion	0.55	$561.77 million	$2.18	30.29
Stantec	$5.83 billion	1.44	$343.11 million	$3.21	23.32

AECOM has higher revenue and earnings than Stantec. Stantec is trading at a lower price-to-earnings ratio than AECOM, indicating that it is currently the more affordable of the two stocks.

Summary

Stantec beats AECOM on 10 of the 17 factors compared between the two stocks.

About AECOM

AECOM, together with its subsidiaries, provides professional infrastructure consulting services worldwide. It operates in three segments: Americas, International, and AECOM Capital. The company offers planning, consulting, architectural and engineering design, construction and program management, and investment and development services to public and private clients. It is also involved in the investment and development of real estate projects. In addition, the company provides construction services, including building construction and energy, and infrastructure and industrial construction. It serves transportation, water, government, facilities, environmental, and energy sectors. The company was formerly known as AECOM Technology Corporation and changed its name to AECOM in January 2015. AECOM was incorporated in 1980 and is headquartered in Dallas, Texas.

About Stantec

Stantec Inc. provides professional services in the areas of infrastructure and facilities to the public and private sectors in Canada, the United States, and internationally. It offers evaluation, planning, and designing infrastructure solutions; solutions for sustainable water resources, planning, management, and infrastructure; environmental services; integrated architecture, engineering, interior design, and planning solutions for buildings; and energy and resources solutions. The company also provides consulting services in engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics. In addition, it offers planning and design services to clients in residential, logistics, retail, infrastructure, energy, higher education, and urban regeneration sectors; architectural and interior design, and planning services in the science and technology, commercial workplace, higher education, residential, and hospitality markets. Further, the company provides transportation advisory, transport engineering, and technical design; project delivery consultancy services for mining, resources, and industrial infrastructure projects; paleontological and archaeological services for the rail, transportation, water, and power and energy sectors; and environmental and cultural resource compliance services. Additionally, it offers consulting services in sustainable building design, energy infrastructure upgrades, sustainable district heating network, and e-mobility; and planning, design, construction administration, commissioning, maintenance, decommissioning, and remediation services. The company was formerly known as Stanley Technology Group Inc. and changed its name to Stantec Inc. in October 1998. Stantec Inc. was founded in 1954 and is headquartered in Edmonton, Canada.