Opinions
Michael Underhill
IBI Group
IBG-T
HOLD
Oct 24, 2016
Stock price when the opinion was issued
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They went through tremendous changes over the last couple of years. It is getting bigger. There is a bit infrastructure theme, as well as the Smarty City business. When they eventually build it out, it will be extremely valuable. He would not be surprised to see a dividend in the next year. (Analysts’ target: $9.50).
Construction specialists, more on the architectural/engineering side. They are going to benefit from much more infrastructure spending in Canada. They also benefit from the urbanization trend, as a lot of the work they do is architectural work for condo development, transit systems for cities on a global basis. Trades at a bit of a discount to some of its peers. 15% of revenue is really in the technology business, basically software that they use to help to power and organize manage transit systems, or the HVAC system for a condominium or office building. There is a lot of data in this, and if they were to spin that out, it should garner a much higher multiple than their traditional architectural/engineering business. Insiders own about 30%. (Analysts' price target is $9.50.)
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Recent results were positive with good growth in profitability and revenues. Debt is still high at 1.8x debt to equity ratio. The stock trades at 1x forward price to sales due to this. However, if the company continues to grow revenues and increase profit margins, the shares will do well. Unlock Premium - Try 5i Free
It is an infrastructure spending play. If you took a profit at this juncture you may be a bit early. The planning phase takes years for one of these projects. Infrastructure spending comes from fiscal stimulus. There is going to be more infrastructure spending and more projects. There will be a longer term need for these companies. This stock has troughed out, but you could make more in the future.