Q: WSP stock has been dropping like a rock lately. Do you know why? Do you have any reason to expect Q4 earnings to be lower (or higher) than expectations of about 2.62? How confident are you of earnings progress in years going forward.? I'm thinking of buying this dip (or selling puts underneath it)
5i Research Answer:
WSP and other industrials fell last week on fears of AI disruption, but it really doesn't make that much sense for WSP to decline on AI fears. It has a giant backlog, and AI is more likely to help it. WSP has beaten estimates eight quarters in a row and we have no reason to expect weakness. It can be cyclical, so the outlook is probably OK, but sometimes management takes a conservative view on guidance. But as noted its backlog provides high growth visibility for the next 24 months or so. EPS growth looks good for three years and consensus estimates confirms this. We would be comfortable buying.