> Bottom-Up Company Analysis: SNC-Lavalin

Bottom-Up Company Analysis: SNC-Lavalin

Posted on Saturday, October 20, 2012 | No Comments

Bottom-Up Company Analysis: SNC-Lavalin


After my last post, which was part I of the transportation sector as a whole, I've now decided to actually begin the process researching my first company. What I will do is try to set up the post so that it'll be somewhat interactive in the sense that you can also do the research yourself, and I won't be spoonfeeding you information (if you're interested in seeing what exactly goes into these analyses). For today, we will solely go over public available information and financials derived from them. Anyway, since us financiers like it concise and short, I'll begin:

Company Fundamental Analysis'

Step 1: Review Public Information


  • 10-K (http://quote.morningstar.com/stock-filing/Annual-Report/2011/12/31/t.aspx?t=XTSE:SNC&ft=&d=576922afa6235de01d716b084d032106)
  • 10-Q (http://quote.morningstar.com/stock-filing/Quarterly-Report/2012/6/30/t.aspx?t=XTSE:SNC&ft=&d=85a4526d9aff1d73b61c4dcf6dca9756)
  • Annual Reports (this can be found on (http://www.sedar.com , company search SNC-lavalin and the date is April 26, 2012)
  • Conference calls (optional, will not be done in this analysis)

Step 2: Financials

1) EPS growth rate

To determine this, we will look at the diluted EPS (which is more accurate than basic EPS) for the previous years, which can be shown as such from the annual report:
EPS                                               Growth
2007: 
2008: $2.05
2009: $2.36
2010: $3.13                            (3.13-2.36)/(2.36)=  32%
2011: $2.49                            (2.49-3.13)/(3.13) = -20%
---------
1st quarter
2011: $0.50                             -12%
2012: $0.44
---------------
2nd quarter
2011 $0.67 
2012 $0.21                       (0.21-0.67)/0.67 = -68%
--------
6 months
2011 $1.17      
2012 $0.66                        (.66-1.17)/(1.17) =  -43%


Since there seems to be a lot of bad spark around SNC around 2011 for Bangladesh and other things, this seems to be the reason why the EPS dropped. Also, in May 2012 there were class action lawsuits commenced, and thus we base a prediction on future EPS growth to be negative. Based on this, the growth rate between Quarter 1 and Quarter 2 is (0.21-0.44)/(0.44) = (-52%) EPS will continue to drop.
  • Cash Flow from Operations 2011 2012 % growth
    2Q 82452 185051 124.4348227
    6M 202055 227182 12.43572295
    Revenues 2011 2012 % growth
    2Q 564388 787011 39.44502718
    6M 1044541 1456065 39.39759186
    EPS 2011 2012 % change
    1Q 0.5 0.44 -12
    2Q 0.67 0.21 -68.65671642
    6M 1.17 0.66 -43.58974359
    Current Assets 2010 2011 2012
    1YR 3566480 3546282
    6M 3670533
    Current Liabilities 2010 2011 2012
    1YR 2886592 3514328
    6M (june 30 2012) 3789849
    Current Ratio 2010 2011 2012
    1YR 1.235533113 1.009092492
    6M 0.968516951
    Working Capital 2010 2011 2012
    1YR 679888 31954
    6M -119316
    Total Net Cash Flow 2010 2011 2012
    1YR
    6M 1111399 1241419
    inc of 10370
    Net Income 2010 2011 2012
    1YR
    6M 183665 100040
    Gross Margin 2010 2011 2012 % change
    1yr 1301 1252 -3.76633
    6M 592801 578113 -2.54068

Anything that was bolded above is a positive indicator for the company. As you can see, it is doing phenomenal with its cash flows and revenues. Unfortunately, this can not be said for much of anything else.


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