Stockchase Opinions

Andrew Pink AtkinsRealis Group ATRL-TO TOP PICK Apr 30, 2025

Rebranded. Becoming a very large, global player in engineering and project management. Asset light. Not in construction anymore. Reasonable margins. Huge backlog. About $10B in revenue a year. Big infrastructure spending has to happen globally. Interest rates coming down is a good thing. Expertise in nuclear. Yield is 0.12%.

(Analysts’ price target is $91.23)
$67.490

Stock price when the opinion was issued

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TOP PICK

Fixed-price contracts were an overhang. Now more into engineering services. His favourite thing is expansion on the nuclear side, and they're involved internationally. This will sustain growth going forward. Low valuation. Balance sheet's better, as is earnings generation. Yield is 0.1%.

(Analysts’ price target is $80.85)
BUY

Big fan of the space, especially with the incoming US administration. Changed its business model, now focused on higher quality and the nuclear resurgence. Nuclear represents about 20% of their business and those margins are very high. Can unlock value by monetizing Hwy 407. Attractive valuation compared to peers.

BUY ON WEAKNESS

Good price to enter right now. Would prefer WSP over this company. Quality earnings, especially after recent changes. 

PARTIAL BUY

Canadian engineering firms have a strong business model in Canada, and they're continuing to expand outside Canada; lots of opportunities to do well. He holds STN instead. Buy a bit now. If price goes up, you'll be happy you got in earlier. If price goes down, buy a bit more to average down.

DON'T BUY

Hard business to value. Not a good option for investors. Better for investors to avoid. 

BUY

When it comes to Canadian infrastructure investment, there are some good companies out there and already trading at attractive multiples. And that's before accounting for any additional investments. This company has really transformed. Nuclear is ~20% of its business and growing at 30% annualized.

DON'T BUY

Not the part of the segment you want to be in.

COMMENT

The former SNC Lavalin which had a checkered history. He likes professional services companies, because there will always be a demand for them. The problem is that occasionally a CEO will take a fixed-price contract that could make a nice margin or lose 5-years' profits. ATRL has been through that. He likes where ATRL is heading. The market isn't afraid of its near-30x PE. Strong growth with 9% margins, which lag its peers like Stantec, but there's little margin of safety here.

TOP PICK

They have a great opportunity on the nuclear energy side. Nuclear energy is needed as a stable energy source to power data base centres. As the nuclear component develops they are making decent money in the interim with its engineering services business. Has an internal free cash flow of 7.4%, much greater than the average and almost 7 times greater than the present TSX stock market. Also has an attractive PEG ratio. There was a 10% earnings surprise.
Buy 12  Hold 1  Sell 1

(Analysts’ price target is $100.79)