Quanta Services (NYSE:PWR) versus Stantec (NYSE:STN) Critical Contrast

Stantec (NYSE:STN) and Quanta Services (NYSE:PWR) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Institutional and Insider Ownership

63.9% of Stantec shares are held by institutional investors. Comparatively, 90.5% of Quanta Services shares are held by institutional investors. 0.5% of Stantec shares are held by insiders. Comparatively, 0.6% of Quanta Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Stantec has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Quanta Services has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.

Valuation and Earnings

This table compares Stantec and Quanta Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stantec	$5.83 billion	1.44	$343.11 million	$3.21	23.58
Quanta Services	$28.48 billion	3.09	$1.03 billion	$11.04	52.87

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

Dividends

Stantec pays an annual dividend of $0.71 per share and has a dividend yield of 0.9%. Quanta Services pays an annual dividend of $0.44 per share and has a dividend yield of 0.1%. Stantec pays out 22.1% of its earnings in the form of a dividend. Quanta Services pays out 4.0% 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. Stantec has increased its dividend for 13 consecutive years and Quanta Services has increased its dividend for 6 consecutive years. Stantec is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Stantec and Quanta Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stantec	0	2	5	0	2.71
Quanta Services	3	6	23	1	2.67

Stantec currently has a consensus price target of $175.00, indicating a potential upside of 131.18%. Quanta Services has a consensus price target of $763.31, indicating a potential upside of 30.78%. Given Stantec’s stronger consensus rating and higher possible upside, equities analysts plainly believe Stantec is more favorable than Quanta Services.

Profitability

This table compares Stantec and Quanta Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stantec	5.91%	19.70%	8.07%
Quanta Services	4.51%	23.56%	8.13%

Summary

Quanta Services beats Stantec on 13 of the 18 factors compared between the two stocks.

About Stantec

Stantec is a global professional services firm that provides engineering, architecture, environmental consulting, and related services. Its work supports the planning, design, and delivery of projects in areas including water, transportation, buildings, energy, and community development. Founded in Edmonton, Alberta, in 1954 as D.R. Stanley Associates, the company later adopted the Stantec name. It is headquartered in Edmonton and serves public- and private-sector clients across North America and in international markets.

About Quanta Services

Quanta Services, Inc. provides specialized contracting and infrastructure services to the electric power, energy and communications industries. Its work spans the planning, design, construction, repair and maintenance of essential infrastructure. The company’s services include electric transmission and distribution lines, substations, renewable energy facilities, natural gas and pipeline systems, and communications networks. Quanta supports projects across the infrastructure lifecycle, from initial development and construction to ongoing upgrades and maintenance.