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WSP Global Inc. (WSP $242.68)
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FirstService Corporation (FSV $216.82)
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Thomson Reuters Corporation (TRI $188.69)
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Jacobs Solutions Inc. (J $134.07)
Q: Looking at the question by Michael on Jacobs today I see a company having 2026 net revenue growth of 6-10 % but a PE of 54 ! Sure it’s a fine company in a good sector but does it really deserve a PE of 54 ? Other solid companies in Canada with historically high PE ‘s such as TRI , WSP , and FSV etc., seem to be going through a valuation revision downward. The question is will the revised valuation remain or will the premium valuation return ? Your thoughts. Thanks. Derek.
5i Research Answer:
The sector often gets a premium valuation because the companies sign long term contracts. Contract backlogs provide revenue visibility and consistency, and help offset concerns over recessionary periods. But on a forward basis, Jacob is only 18X earnings. At year end, many sites use 2025 estimates still, but 2026 estimates are more appropriate now. WSP is 25X, which is one reason why an acquisition could work for it, at the right price. Premium valuations could return IF big contracts continue to increase backlogs. But the sector still does have some cyclicality.