STN vs. UMAC: Which Infrastructure Innovator Has More Upside?

Core Insights - Unusual Machines (UMAC) and Stantec (STN) are both engineering-focused companies innovating in the infrastructure and industrial tech sectors [1] - This comparative analysis aims to assist investors in evaluating the current situation of these companies to identify potential stock opportunities [2] Unusual Machines (UMAC) - The U.S. drone market is expected to grow at a CAGR of 12.5% from 2024 to 2033, benefiting UMAC as demand for high-tech aerial systems increases [3] - UMAC reported a 59% year-over-year increase in revenue for Q1 2025, with a gross margin of 24% despite tariff impacts, indicating effective cost optimization [4] - Government initiatives, such as the Drones for America Act, position UMAC to gain from defense sector contracts, especially with a production facility set to deliver in September 2025 [5] - However, UMAC faced a net loss of $3.3 million and an operating cash outflow of $1.2 million in Q1 2025, raising concerns about achieving positive cash flow in the next four to six quarters [6] Stantec (STN) - STN is experiencing growth due to rising demand for infrastructure, water security, and climate-resilient solutions, driven by smart city initiatives and infrastructure investments [7] - In Q1 2025, STN achieved a 13.3% year-over-year growth in net revenues, with organic revenue growth of 5.9% in the U.S. [7] - STN's Canadian revenues grew by 15% year-over-year, supported by wastewater projects and industrial developments, while the U.K. water business saw a 20% revenue increase [8] - The company demonstrated strong margin expansion, with project margins increasing by 10 basis points and adjusted EBITDA margins improving by 70 basis points [9] Financial Estimates - The Zacks Consensus Estimate for UMAC's 2025 sales is $10.4 million, indicating an 86.5% year-over-year increase, with a projected loss of 36 cents per share [11] - For STN, the 2025 sales estimate is $4.8 billion, reflecting an 11.4% year-over-year growth, with earnings expected to be $3.86 per share, a 19.5% increase [13] Valuation Comparison - STN trades at a price-to-book ratio of 5.96X, while UMAC trades at 19.21X, indicating that STN offers a more attractive valuation despite both companies trading at premiums compared to historical valuations [10][14] - The analysis suggests that STN is a buy due to its strong global infrastructure business and margin performance, while UMAC is rated as a hold due to its high valuation [16]