SNC-Lavalin (TSX:SNC) stock rose 1.78% on March 21. Shares have plunged 25.4% in 2019 so far.
The company has been embroiled in one of the worst political scandals Canada has seen in the modern era. Prime Minister Justin Trudeau’s Liberal cabinet has suffered several resignations since Jody Wilson-Raybould, Canada’s Minister of Justice and Attorney General at the time, left her post amid allegations she had been pressured to intervene in an ongoing criminal prosecution against SNC-Lavalin.
The political fallout will spillover into the 2019 election. But what about SNC? Will the stock be plagued by volatility for the rest of the year?
The company released its fourth-quarter and full-year results for 2018 on February 22. SNC had a difficult year in 2018, with its Mining & Metallurgy and Oil and Gas segments underperforming.
There are also risks due to the deterioration in the geopolitical relationship between Canada and Saudi Arabia. SNC has said that it will focus on earnings and cash flow generation in 2019, and projects adjusted EBITDA between $900 million and $950 million.
Shares are trading at their lowest level in 10 years. The stock is currently at the lower end of its 52-week range. Shares last had an RSI of 40 as of close on March 21. This puts the stock in neutral territory in late March.
Odds are SNC Lavalin will not be subject to a punitive result in its case, but populist pressure in the wake of this scandal is a concern. For investors on the hunt for a high-risk, high-reward play, SNC is a solid pick.
