Stantec Inc. (STN) | The Buildout — AI Infrastructure
The Verdict
Stantec is a global professional services firm specializing in engineering, architecture, and environmental consulting. It designs and permits the physical facilities that house AI workloads—from hyperscale data centers to supporting power, cooling, and water infrastructure—making it a key enabler in the AI infrastructure buildout.
| Market Cap | — |
| Revenue (TTM) | $5.6B |
| Revenue Growth | +2.2% |
| EBITDA Margin (TTM) | 13.7% |
| Net Debt | $1.6B |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Record backlog up 13.2% YoY, covering roughly 13 months of work.
- Adjusted EBITDA margin expanded 90 bps to 17.9%, hitting the 2024–2026 target one year early.
- Water business delivered consecutive double-digit organic growth (+11% in FY2025) with multi-year frameworks including UK AMP8 and Scottish Water.
- Data center pipeline spans 5 hyperscalers and over 100 mission-critical facilities, with client capex of ~$35 billion.
- Strong balance sheet: net debt/EBITDA of 1.3× and free cash flow / net income of 1.3×.
What We’re Watching
- U.S. organic growth recovery — needs to show mid-single-digit prints in 2026 after FY2025’s 3.4% slip.
- CEO succession in October 2026 creates leadership uncertainty; successor unnamed as of mid-2026.
- M&A valuation gap may delay acquisitions; management flagged seller expectations taking time to adjust.
- Data center revenue is deliberately capped at ~5% of net revenue, limiting AI upside.
The thesis is strengthening: record margins and backlog, a durable water franchise, and a massive AI infrastructure pipeline support continued growth. The near-term test is whether U.S. organic reacceleration materializes and whether the CEO transition sustains the current capital-allocation discipline.
Earnings Beat
Stantec’s Q1 2026 net revenue was $1.7 billion, up 9.1% year over year, with adjusted EBITDA margin expanding 70 basis points to 16.9%. Adjusted EPS rose 14.7% to $1.33, and backlog reached a new record.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.5B | $1.5B | $1.3B | +11.4% |
| Gross margin | 39.6% | 37.3% | 43.9% | -430bps |
| EBITDA | $194M | $210M | $161M | +20.6% |
| EPS | $0.70 | $0.60 | $0.61 | +14.7% |
| Contract Backlog | $9.0B | $8.6B | $7.95B | +13.2% YoY |
Our teams are already working on 5 separate hyperscalers to develop approximately 2.5 gigawatt of capacity. Combined, these facilities are worth almost $35 billion.— Gord Johnston, President & CEO, February 26, 2026
Management tone: Management introduced a dedicated AI section, proactively pivoted to more active buybacks, and acknowledged the U.S. organic slowdown while pointing to improving activity and a 3% sequential backlog uptick.
Management Guidance
For FY2026, management guided net revenue growth of 8.5–11.5%, mid-to-high single-digit organic growth in each geography, adjusted EBITDA margin of 17.6–18.2%, and adjusted EPS growth of 15–18%. The guidance includes the Page acquisition and assumes U.S. organic reacceleration.
Trajectory
Stantec’s revenue grew 10.7% in FY2025 to $6.5 billion, led by a double-digit organic expansion in Water and a boost from the Page acquisition in Buildings. Adjusted EBITDA margin rose 90 basis points to 17.9%, exceeding the 2024–2026 plan target a year early. The Q1 2026 print sustained the growth pace, with backlog reaching a record high.
The Model
No projection published for this company. No model projection is available for this company.
The model publishes revenue and EBITDA projections only where the evidence supports them. Where it does not, nothing is shown rather than an estimate.
Looking Ahead
The next twelve months revolve around three events: the Scottish Water contract award that will lock in a decade-plus Global Water franchise, quarterly U.S. organic growth prints that must prove the 2025 slowdown was temporary, and the announcement of a new CEO alongside a strategic plan that could set higher margin targets.
- Mid-2026Scottish Water formal award — Confirms a multibillion-pound, 13-year programme for Global Water.
- Q3 2026Q2 2026 results — First clean read on U.S. organic reacceleration in 2026.
- October 2026CEO transition — Gord Johnston retires; successor’s strategy and capital allocation to be watched.
- Late 2026 / Early 2027Next strategic plan — Potential to reset long-term margin and growth targets higher.
Financials
Annual Summary
| Metric | FY2025 | TTM |
|---|---|---|
| Revenue | $5.5B | $5.6B |
| Gross Margin | 41.1% | 40.1% |
| EBITDA | $737M | $1.4B |
| EBITDA Margin | 13.5% | 13.7% |
| Net Income | $319M | $329M |
| Free Cash Flow | $571M | $897M |
| Net Cash | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)40.1%
- EBITDA Margin (TTM)13.7%
- Net Margin (TTM)5.8%
- ROIC10.2%
- FCF Conversion64.3%
- SBC / Revenue0.3%
The Company
Stantec provides engineering, architecture, and environmental consulting services across five business units—Water, Buildings, Infrastructure, Environmental Services, and Energy & Resources. Its work spans from designing municipal water systems and transportation corridors to planning hyperscale data centers and mining operations. The firm does not own physical assets; its product is expertise, delivered through frameworks, fixed-fee contracts, and time-and-materials engagements.
The company operates through over 34,000 employees across Canada, the United States, and globally. It is structured around three geographic segments, with Water and Buildings as its largest revenue contributors. Stantec grows both organically and through acquisitions—it has completed more than 150 deals—and maintains a disciplined capital allocation model, with leverage at 1.3× net debt/EBITDA.
Business Segments
Competitive Landscape
Stantec competes against other large engineering and consulting firms such as AECOM, Tetra Tech, Jacobs, and Parsons. The firm differentiates on margin—its 17.9% adjusted EBITDA margin far exceeds the peer set—and on a diversified, partner‑agnostic approach to technology rather than proprietary software platforms.
- JacobsAI infrastructure pipeline up 400% YoY; NVIDIA digital‑twin partnership contrasts with STN’s partner‑agnostic approach.
- Tetra TechBacklog up 8% sequentially; proprietary Waternet software; flagged caution on state/local grants.
- ParsonsHeavy defense exposure; data centers in Middle East only; margins ~10%.
- AECOMNamed in filings; not discussed.
Supply Chain
Stantec sits at the front-end of the infrastructure lifecycle, providing planning, design, and permitting services. As an asset-light firm, it has minimal direct supplier dependencies.