Q: Hi Peter
I was wondering what you think of the valuation of WSP vs peers. Can you provide your metric to rate and the current valuation. Also would you buy at this level or what price level would you begin to buy. To me it looks expensive. I would appreciate your expert opinion.
Thank you
I was wondering what you think of the valuation of WSP vs peers. Can you provide your metric to rate and the current valuation. Also would you buy at this level or what price level would you begin to buy. To me it looks expensive. I would appreciate your expert opinion.
Thank you
5i Research Answer:
WSP is currently 25X earnings and about 12X EV/EBITDA. STN is 24X and 15X, respectively. ATRL is 25X and 13X. J is 18X and 13X. WSP is the largest of this group. Overall, valuations are quite close here. Dividend yields for the Canadian companies are also similar. We can't say 25X is 'cheap', but it is actually below WSP's 10-year average range (27X to 38X). We would be comfortable buying in the $235 range considering the company's recent large acquisition and overall growth potential.