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Stantec said its goodwill charge reflects weaker U.S. and international operations owing to difficult economic conditions.Stantec

On a recent marketing trip through Europe, Stantec Inc. executives made sure investors knew just how active their acquisition pipeline looks, noting that talks with nearly 50 different firms are ongoing.

That's pretty impressive. Any new deals would only add to a string of acquisitions the consulting firm has already inked in the past few years, including five in the past 12 months.

And yet, Stantec's new set of record earnings were driven by ... organic growth.

For the third quarter, Stantec reported third-quarter earnings of 74 cents per share. Driving the bus is a seven per cent organic revenue growth, much higher than anyone assumed. All of a sudden management's so confident about its prospects that it hiked its organic growth outlook to between four and five per cent, up from between two and three per cent.

Behind all of this is a booming industrials practice that focuses on mining, power, oil and gas. Although the unit's gross margins are the lowest of any of Stantec's divisions, the level of activity keeps the cash coming in.

Investors are pleasantly surprised. Stantec's shares are up seven per cent as of Thursday morning, and they've gained 30 per cent since January.

Despite the superb organic growth, Stantec is still intent on acquiring. Very intent. According to analyst Sara Elford at Canaccord Genuity, on the recent marketing trip management stressed that its growth would be 25 per cent organic, 75 per cent acquisition. Should those acquisitions be accretive and the organic growth remain strong, investors could be in for quite the ride.

Earlier this year, Stantec announced its first every quarterly dividend of 15 cents per share.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

SymbolName% changeLast
STN-N
Stantec Inc
-0.93%83.04
STN-T
Stantec Inc
-1.12%112.46

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