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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Costain Group Plc | LSE:COST | London | Ordinary Share | GB00B64NSP76 | ORD 50P |
| Price Change | % Change | Share Price | Shares Traded | Last Trade
|
|
|---|---|---|---|---|---|
| 0.40 | 0.48% | 83.40 | 352,751 | 10:17:41 |
| Bid Price | Offer Price | High Price | Low Price | Open Price | |
|---|---|---|---|---|---|
| 83.40 | 84.00 | 84.00 | 83.20 | 83.20 | |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Hghwy,street Constr,ex Elvtd | 1.33B | 22.1M | 0.0799 | 10.44 | 230.76M |
| Last Trade Time | Trade Type | Trade Size | Trade Price | Currency |
|---|---|---|---|---|
| 10:34:03 | O | 25,000 | 83.70 | GBX |
| Date | Time | Source | Headline |
|---|---|---|---|
| 15/4/2024 | 14:07 | ALNC |  Hercules Site Services joins Costain's UK-wide labour framework |
| 09/4/2024 | 16:16 | UK RNS | Costain Group PLC Director/PDMR Shareholding |
| 09/4/2024 | 13:32 | UK RNS | Costain Group PLC Director/PDMR Shareholding |
| 09/4/2024 | 09:33 | UK RNS | Costain Group PLC Annual Report and Accounts and Notice of 2024 AGM |
| 04/4/2024 | 09:55 | UK RNS | Costain Group PLC Additional Listing |
| 15/3/2024 | 13:07 | ALNC | IN BRIEF: Costain wins place on GBP4 billion carbon capture project |
| 15/3/2024 | 08:30 | UK RNS | Costain Group PLC Key Partner for Landmark Carbon Capture Project |
| 12/3/2024 | 12:20 | ALNC | Costain proposes final dividend despite profit fall as outlook rosy |
| 12/3/2024 | 07:01 | UK RNS | Costain Group PLC Directorate Change |
| 12/3/2024 | 07:00 | UK RNS | Costain Group PLC 2023 Full Year Results |
Costain (COST) Share Charts1 Year Costain Chart |
|
1 Month Costain Chart |
Intraday Costain Chart |
| Date | Time | Title | Posts |
|---|---|---|---|
| 24/4/2024 | 14:06 | Costain | 3,562 |
| 10/1/2024 | 11:44 | UNDERVALUED GOOD recovery play.. COSTAIN | 6,509 |
| 25/11/2020 | 19:33 | Rishi Sunak's National Infrastructure Strategy for Ј100 billion of long-term inv | 6 |
| 17/4/2020 | 14:35 | COSTAIN - PE of 2 | 8 |
| 24/4/2013 | 08:47 | *** Costain *** | 13 |
| Trade Time | Trade Price | Trade Size | Trade Value | Trade Type |
|---|---|---|---|---|
| 09:34:04 | 83.70 | 25,000 | 20,925.00 | O |
| 09:33:40 | 83.70 | 14,259 | 11,934.78 | O |
| 09:27:32 | 83.43 | 641 | 534.79 | O |
| 09:25:59 | 83.70 | 2,966 | 2,482.54 | O |
| 09:23:25 | 83.70 | 2,508 | 2,099.18 | O |
| Top Posts |
|---|
Posted at 25/4/2024 09:20 by Costain Daily Update Costain Group Plc is listed in the Hghwy,street Constr,ex Elvtd sector of the London Stock Exchange with ticker COST. The last closing price for Costain was 83p.Costain currently has 276,684,741 shares in issue. The market capitalisation of Costain is £230,755,074. Costain has a price to earnings ratio (PE ratio) of 10.44. This morning COST shares opened at 83.20p |
Posted at 23/4/2024 18:47 by mirabeau From IC April 8 2024 - Costain third in line as a potential takeover target -IC 2024 Takeover Screen Stocks Adjusted Reported Company TIDM Industry Price (£) Market Cap (£mn) EV (£mn) EV/EBIT LTM EV/EBIT NTM Variance EV/EBIT LTM EV/EBIT NTM Variance Jupiter Fund Management JUP Investment Trusts/Mutual Funds 0.87 455 100 1.0 1.5 46% 4.6 1.4 -69% Rathbones RAT Investment Managers 15.38 1,601 234 1.7 1.3 -22% 3.6 1.2 -66% Costain COST Engineering & Construction 0.77 213 77 1.9 1.7 -8% 2.5 1.8 -29% Centrica CNA Gas Distributors 1.24 6,635 4,684 2.0 3.3 67% 1.2 3.2 154% EnQuest ENQ Oil & Gas Production 0.15 292 972 2.3 2.6 15% 2.3 2.6 16% Diversified Energy DEC Oil & Gas Production 10.03 474 1,501 2.8 3.8 33% - 5.3 - Reach RCH Publishing: Newspapers 0.73 228 275 2.8 2.8 -1% 2.9 2.8 -4% Bridgepoint BPT Investment Managers 2.48 1,971 441 2.9 2.1 -28% 3.5 2.0 -41% Just JUST Life/Health Insurance 1.08 1,118 1,276 3.1 2.7 -11% 2.7 2.7 -1% Kenmare Resources KMR Other Metals/Minerals 3.55 317 335 3.1 4.4 42% 3.0 4.7 57% Pharos Energy PHAR Oil & Gas Production 0.22 91 94 3.2 3.2 -2% - 2.2 - Secure Trust Bank STB Major Banks 6.66 125 269 3.2 2.6 -21% - 2.6 - PayPoint PAY Regional Banks 4.78 347 240 3.4 3.1 -9% 3.8 3.1 -19% Plus500 PLUS Investment Banks/Brokers 18.37 1,435 930 3.6 3.8 5% 3.6 3.9 9% TP ICAP TCAP Investment Banks/Brokers 2.26 1,721 1,105 3.7 3.7 0% 6.7 3.7 -45% Galliford Try GFRD Engineering & Construction 2.34 232 85 3.7 3.1 -17% 4.4 3.1 -31% Smiths News SNWS Wholesale Distributors 0.48 115 145 3.8 3.8 1% 3.8 3.8 0% On The Beach OTB Other Consumer Services 1.65 275 108 3.9 2.9 -26% 4.6 3.4 -24% Drax DRX Electric Utilities 4.84 1,863 3,188 4.0 4.5 14% 3.9 4.6 16% Schroders SDR Investment Managers 3.68 5,748 2,761 4.4 3.8 -13% 5.2 3.9 -24% Liontrust Asset Management LIO Investment Managers 6.33 406 305 4.7 4.9 4% 25.4 5.0 -80% Morgan Sindall MGNS Engineering & Construction 22.70 1,050 665 4.7 4.5 -4% 4.8 4.6 -4% Bank of Georgia BGEO Major Banks 51.20 2,333 3,108 4.9 4.5 -8% - 4.5 - Capital Limited CAPD Engineering & Construction 0.88 173 222 4.9 4.6 -7% 4.9 4.6 -6% Kier KIE Engineering & Construction 1.25 527 713 5.0 4.6 -7% 6.4 4.6 -28% Future FUTR Publishing: Books/Magazines 6.97 794 1,226 5.1 5.4 5% 7.8 5.3 -32% Phoenix PHNX Life/Health Insurance 5.48 5,469 3,315 5.2 |
Posted at 23/4/2024 18:44 by mirabeau Bullish IC article from Feb 2024 --- How Kier and Costain are thriving as rivals fail More construction companies went bust last year than in any other industry, but some shares are soaring - Lack of exposure to residential projects has helped - Both struggled during the pandemic but have shored up their balance sheets More construction companies went bust last year than in any other sector for the third year running, but most of the major listed contractors continue to thrive. Some 4,370 construction companies entered an insolvency process in the year ended November 2023, equating to 17 per cent of all UK corporate insolvencies, according to an analysis of Insolvency Service data by accountancy firm Mazars. “There are now on average a dozen building companies going under every single day in the UK,” said Mark Boughey, a restructuring services partner at the firm. Small and medium-sized contractors said workloads declined by 15 per cent last year and almost half reported a fall in new enquiries, the Federation of Master Builders said. However, contractors at the top end of the sector are flourishing, though, with most listed operators recording share price gains that comfortably outperformed the market. Kier’s (KIE) shares are up 82 per cent over the past 12 months. Shares in Costain (COST) are up 55 per cent, Galliford Try (GFRD) 47 per cent and Morgan Sindall (MGNS) 31 per cent. Only Balfour Beatty (BBY) has been a laggard, with its shares trading 8 per cent lower. Jefferies analysts highlighted investor concerns about a slowing US construction market and cancellations to future work from HS2 as factors for this. In general, listed contractors’ lack of exposure to the UK’s moribund residential new-build market has been a bonus. Output in private housing shrank by 19 per cent last year and is set to contract by a further 4 per cent this year, according to the Construction Products Association. Over the past decade, the likes of Kier, Costain and Balfour Beatty have switched their domestic focus much more towards delivering large infrastructure projects. The high-profile failure of Carillion in 2018 and Interserve a year later means this is a less crowded field and contract terms for this work are more industry-friendly. It is typically done on a ‘cost-plusR “You’ve got arguably less of the more ill-disciplined players left because the likes of Carillion have gone bust and the ones that remain are just managing that whole risk, contract appraisal and bidding process a lot better,” said Aynsley Lammin, an analyst at Investec. According to Balfour Beatty’s most recent annual report, only 10 per cent of UK construction work is carried out under a fixed-price contract, compared with 50 per cent in 2018. This isn’t a luxury afforded to smaller firms, and in many cases risk is “passed down the supply chain”, Boughey said, with tier two and tier three suppliers often tied into fixed-price contracts. “They don’t seem to have much bargaining power with the main contractors,” he said. Firm foundations The other major factor behind listed contractors’ rerating has been balance sheet strengthening. Kier had been in a precarious position even before the pandemic and undertook two rights issues between 2018-2021, raising over £500mn and offloading non-core businesses in a bid to stay afloat. Shareholders understandably took flight, and it’s taken a couple of years of significantly improved trading and debt reduction to tempt them back. Average month-end net debt fell from £582mn in 2021 to £232mn last year and last week the company announced plans to refinance its remaining debt through a £250mn bond issue. The five-year notes offered an interest rate of 9 per cent and attracted a BB+ rating from Fitch. The ratings agency said that 60 per cent of Kier’s contracts have pass-through clauses, allowing for costs to be recouped. Costain also had to complete a £100mn rights issue at the height of the pandemic in March 2020 at a time when its revenue and profits were plummeting. It has also had to rebuild trust – when we featured the company in our ideas section in September 2022 its shares were so lowly rated that the company was only valued at around half of its net assets. Even after their recent upgrade, they are valued at just six times forecasted earnings. Lammin said Costain has made “good progress” on improving profitability, with the company’s adjusted operating margin edging up to 2.3 per cent at the half-year and a roadmap in place to bump this up above 5 per cent. “If you believe in the sustainability of those structurally higher margins as they deliver them and a less risky balance sheet, then [Costain] looks very, very cheap,” he said. [But] they’ve got to convince the market the improvements they’re making are sustainable.” The government’s Infrastructure and Projects Authority (IPA) updated its project pipeline last week and acknowledged that a 40 per cent increase in construction prices since January 2020 meant project owners had been forced to “reset expected outputs to remain within approved budgets”. However, the IPA said there were still £164bn of investments planned by the end of the next fiscal year, adding that £700bn-£775bn of work needs to be done over the next decade. Whether all of this gets commissioned (or how quickly) will play a big part in listed contractors’ fortunes in the coming years. end |
Posted at 22/4/2024 08:17 by someuwin Share tip: Costain is building itself up againBuilder is leading the resurgence in the construction sector Lucy Tobin Sunday April 21 2024, 12.01am, The Sunday Times "The construction sector is picking itself up out of the rubble. Last year, more building companies went bust than in any other industry — a record 4,400 collapsing due to supply chain disruption, high material prices and labour shortages. The larger players stayed the course — most had improved their risk calculations after the liquidation of rival Carillion and Interserve’s rescue by its lenders. Now, more stable interest rates, easing inflation and more contract tendering are boosting construction’s appeal. The City has noticed, to an extent: Kier and Costain’s shares are 20 per cent higher than at the start of the year; Balfour Beatty and Galliford Try are up about 7 per cent. But they’re still a long way from their past peaks. Costain, for example, is now trading at 75p, less than half its pre-pandemic share price of 194p, while back in May 2019, its shares changed hands for £3. Since then, the firm, founded in Liverpool in 1865 has been punished for booking expensive charges for badly priced energy and road contracts, and diluted by a £100 million rights issue at the start of the pandemic, required to secure the balance sheet. But Costain is a vastly improved outfit from the housebuilder it was long ago. It has been transformed into an infrastructure contractor with tentacles in many a sector. It works with most of the major water suppliers on pollution-kerbing upgrades, with National Highways, Transport for London and National Rail, on the government’s contracts to decommission first-generation nuclear sites, and in defence. Costain looks poised to benefit from the UK’s likely Labour-led investment in more infrastructure projects. As Joe Brent, head of research at Liberum, explained: “We are optimistic about the outlook for infrastructure and believe Costain is the purest trade on this theme.” Last month, the firm posted a 10.5 per cent rise in adjusted operating profit to £40 million for 2023. This year, more than 80 per cent of its revenues have already been booked. Chief executive Alex Vaughan pointed out that the value of this is about three times last year’s earnings. This confidence helped Costain bring back its annual dividend. Its cashflow is smoother due to recent cost-cutting tinkering: for example, its pension fund contributions were dramatically slashed following a review last year. Net cash stands stronger at £164 million, from £124 million a year ago. The relatively small gap between those cash reserves and Costain’s £217 million market capitalisation hammers home its good value. Of course, the firm remains vulnerable to the ebbs and flows of contract-awarding mandarins, as has been seen with HS2. But analysts predict its pre-tax profit will exceed £52 million next year, and Costain’s shares are trading on just five times earnings for this year. It has a packed order book of blue-chip customers and has rebuilt its reputation: Buy Costain." |
Posted at 14/3/2024 17:52 by boystown A bit from Master Investor fwiw:Costain (LON:COST) – Better Margin Expected Growth This group shapes, creates and delivers pioneering solutions that transform the performance of the infrastructure ecosystem across the UK’s transport, energy, water, and defence markets. The year to end December reported revenues lower at £1.33bn (£1.42bn) while adjusted pre-tax profits were up at £44.2m (£34.2m), leaving basic earnings better at 12.2p (9.9p) and paying out an unchanged 1.2p dividend per share. Impressively the group ended its year with a net cash balance 32.8% higher at £164.4m (£123.8m). For the current year and going forward the group has a strong opportunities pipeline as well as having in excess of £1bn of revenue secured for 2024 at its year-end, representing more than 80% of expected revenue. CEO Alex Vaughan stated that: “The quality and balance of our forward work across our two divisions gives us good visibility on future revenue and margin. We have more than 80% of expected revenue secured for 2024 and our forward work stands at around three times 2023 revenue. We see continuing momentum in the business and remain confident in the Group’s growth prospects.” Analyst Andrew Nussey at Peel Hunt considers that the company is an undervalued stock in an undervalued sector, with its shares trading on just 5.6 times forecast earnings. Nussey reiterated his Buy recommendation while increasing his Price Objective from 80p to 95p. Over at Liberum Capital its analysts Joe Brent, Alex O’Hanlon and Sanjay Vidyarthi also rate the group’s shares as a Buy, looking for 100p in due course. They estimate that current year sales will be £1.22bn, with £46.5m pre-tax profits of £46.5m, generating 12.3p of earnings and covering 1.2p per share of dividend. For the group’s 2025 trading the analysts go for £1.22bn sales, £52.1m profits, earnings of 13.8p and a 1.4p dividend per share. The shares touched 72.45p on Tuesday in response to these results, before drifting back to an almost unchanged 66p. At that level the £190m capitalised group’s shares certainly are an undervalued stock, trading at 5.5 times current year price-to-earnings and just 4.9 times its 2025 hopes. |
Posted at 14/3/2024 15:13 by catabrit I like Leo and considering the liquidity I think BBY will be a better bet for the vast majority of institutional money. You are basically paying nothing for the going concern value so similar to costain. However, the US exposure would concern me a bit as fixed price contracts are more prevalent. Likewise whilst I think the whole sector has smartened up and sorted out its attitude towards risk management, the business model will always command a lousy valuation. I do think Costain is differentiated which is why I picked it but if they are not prepared to break out the consulting data then perhaps I need to accept it will get priced like a contractor in perpetuity.I agree that AV is in a precarious position considering the share price He will be given leeway until the pension situation is confirmed and will be judged by the course of action post that. |
Posted at 14/3/2024 14:28 by catabrit Stdyeddy - thank you. I try my best to be objective.Rougemale1 - my rant is about Costain pre and post Alex. In Alex’s defence he would point to zero contract issues (albeit the problems tend to be back ended so if there are provisions on contracts signed during his reign we won’t know for another few years). But if he was in charge of consulting and digital pre becoming CEO why have we gone from smart infra company to just infra? Why are we re-structuring digital? Does that mean he got the strategy wrong? And why are we not breaking out the consulting revenue and income line? I don’t care if it is bundled or hard to figure out - just do it. Don’t tell us - show us. Show us your revenue and income pie is safer / better than peers. Why should we investors do the hard work? If he wants his LTIP then he better break it out AND hit margins AND sort out the derisory capital return. Yes he’s handcuffed by the pension trustees and yes the wording has changed to allow him to return cash to shareholders if it’s in surplus but for God’s sake, bang the bloody drum as CEO. The Balfour CEO clearly articulated the value proposition in his shares during the presentation yesterday. He said here are our infrastructure investments, here’s our net cash and here’s our market cap. Oh and here’s all the cash we plan to generate over the next 5-yrs. Very simple math. Even IR should be breaking this out in their presentations. There should be an entire page in the deck about the market cap vs the net cash and the 30m of annual free cash flow they think they can generate I.e. we are aware of the past guys and we are sorry but here is the future and it is going to be rosy. Alex talks about the business and customers and mega trends and that’s great. It’s part of the job. But it’s only one part. The other is to be a steward of our capital and to send the tanks in when there is blood on the streets. I will likely sell my shares regardless if the buyback isn’t a very meaningful one as it shows he does not get it. Or I will go activist and put it up for a vote. We know they need at least 100m for banking purposes. Make that 120m. Does 160m in the bank vs 120m really move the needle order book wise? I doubt it. But a 30-40m buyback meaningfully moves the needle in terms of market cap. So divi at level of FTSE all share and buy back as much as the business will allow. If he refuses to do it, it either means he cannot because of business purposes which means the cash is a value trap or he does not get how capital allocation works. Nigelpm - I also bought in 2022 because of this and have done well as net cash has risen. But I believe that Costain spent a long time trading at net cash in the past. From 2010 to 2013 I believe. They only started to get a proper valuation on the core business from 2014 to 2018 when the order book was growing. I do think we will get there and we just need the actuarial surplus to be confirmed or not. And we probably need a few more years of zero contract issues. So I anticipate a good risk adjusted return from these levels but it might take longer than we all expect and I think that scepticism from the wider market is probably valid considering Costain’s prior promises and the general disdain towards contractors and contracting. Costain was openly telling shareholders that its target cost model was better than a fixed cost one (and 90 percent of its book was target cost as far back as 2013). Yet target cost can lead to issues if there is too much vagueness around scope and a high degree of complexity. So I think management need to be more open with us about what is in the order book and how they have dealt with target cost risk management and why they believe no major provisions will be forthcoming. Trust us is not enough considering the past. |
Posted at 10/1/2024 10:53 by roguemale1 Food for thought. Metrics. Don't shoot me on the av share price used!2023 2022 2021 2020 2019 2018 2017 2016 Shares in issue m 275 275 275 275 108 108 108 108 Rough av share price £ 45 55 55 270 400 430 350 Rough MC £m 123.75 151.25 151.25 291.6 432 464.4 378 Pension contrib m 11.7 10.4 9.9 10.4 9.8 8.9 8.5 Pension eq charge m ? ? 0.9 8.6 ? ? ? Divi p/share 0 0 0 0 15.2 14 12.7 Cost of Divi m 0.0 0.0 0.0 0.0 16.4 15.1 13.7 £1 by my birthday! |
Posted at 05/9/2023 09:52 by dickbush I'm a happy and optimistic holder but I don't think a 1.2p divi is supportive of the share price beyond the fact that COST is actually back to paying a divi. What will drive the share price from here is the achievement of its Operating Margin goals over 2023 and beyond and the re-rating that should transpire. COST is for patient, optimistic investors.Having said that, as a previous scribbler has suggested, COST is a sitting duck for acquisition while it hovers around 60p. |
Posted at 24/8/2023 17:33 by value hound From Master Investor FWIW... (but it seems a surprisingly modest target price???)Costain Group Is Looking Far Too Cheaply Rated It is not the latest Trading Update that inspires to push the shares of Costain Group (LON:COST) the construction and support services business. Instead, it is the incredibly low price-to earnings ratio of its shares. Normally investors would dismiss such low p.e. stocks because they would have an instant view that the rating is a foreboding of poor times to come. But not so in the case of this smart infrastructure solutions provider to the UK transportation, energy, water, and the defence markets. The Business The Maidenhead, Berkshire-based group has a description out for its business stating that it helps to improve people’s lives by creating connected, sustainable infrastructure that enables people and the planet to thrive. It shapes, creates and delivers pioneering solutions that transform the performance of the infrastructure ecosystem across the UK’s transport, energy, water, and defence markets. The 158-year old group, which has some 3,500 employees, is organised around its customers anticipating and solving their challenges and helping to improve performance, by bringing together its unique mix of construction, consulting and digital experts the company engineers and delivers sustainable, efficient and practical solutions. The company operates through two segments, Transportation and Natural Resources. The Transportation segment operates in the road, rail, and integrated transport markets. (73.6% of 2022 sales) The Natural Resources segment operates in the water, energy, and defense markets. (26.4% of 2022 sales) It offers consultancy and advisory, digital technology, climate change, and complex program delivery solutions and services. Recent Financing Facilities Agreement In late July the £148m capitalised company announced that it had successfully concluded negotiations with its bank and surety facility providers to refinance a new three-year agreement of its bank and bonding facilities. The new facilities agreement to September 2026 comprises an £85m sustainability-linke The Interim Results Yesterday the group reported its results for the six months to end June showing almost standstill revenues at £664.4m (£665.2m), while the adjusted pre-tax profit of £15.9m was a massive uplift from the previous year’s first half loss of £7.4m. Even the Interim earnings were impressive at 4.4p per share. The company’s performance in the first half demonstrates the strength and resilience of its business, with an increase in adjusted operating profit supported by the robust growth in Natural Resources, resilience in Transportation and continued positive cash generation. Management Comment CEO Alex Vaughan stated that: “There remains a positive outlook across our markets, while recognising the short-term rephasing of the government’s transport spending. We expect that the sectoral growth we have seen in Natural Resources, together with the rephasing and rescoping of some infrastructure projects in Rail and Road to continue for the remainder of the year and into 2024. While we are mindful of the macro-economic backdrop, recognising the timing of customer procurement cycles, the quality of our secured and preferred bidder work gives us good visibility on future revenue, with more than 90% of revenue secured for the remainder of 2023. Our expectations for 2023 remain unchanged and we continue to be confident in the Group’s long-term prospects.” The Equity There are some 277m shares in issue. The larger holders include ASGC Construction (15.06%), Ennismore Fund management (6.74%), JO Hambros Capital Management (6.66%), Gresham House Asset Management (5.43%), KBI Global Investors (4.59%), FIL Investment Advisors (2.96%), Hargreaves Lansdown Asset Management (2.74%), Amundi Asset Management (2.64%) and Artemis Investment Management (1.95%). Brokers’ Views – Buy With A Target Price Of 80p Analyst Joe Brent at Liberum Capital is very bullish about the group, its low rating and its future prospects. For the current year to end December he has estimates out for a slight dip in sales to £1.37bn (£1.42bn), while he has an increased pre-tax profit figure of £41.0m (£34.2m), lifting earnings up to 11.30p (9.83p) per share. He even sees a 1.13p per share dividend this year against nil previously. For next year he has £1.25bn sales, £45.0m profits, 12.12p earnings and a 1.21p dividend. Jumping ahead for the year to end December 2025 Brent has forecasts of £1.29bn revenues, £49.8m profits, 13.39p earnings and a 1.34p dividend. Brent is predicting net cash at the 2023-year end of £135m (£124m), then £165m in 2024 and £183m in 2025. Based on those estimates it is understandable why the analyst has such a strong 80p price objective for the shares. Across a consensus of four analysts who follow the company the Average Target Price is 73p for the shares, with the Highest Price Target being 102p. My View – A Price Of 62p Looks Achievable The group’s Order Book at end June was a massive £2.5bn, with followers expecting some big order advances in the second half year. Even though I have previously set two Target prices for this group’s shares, with neither of them performing satisfactorily, I still persist in stating that I really feel that this group’s shares are ridiculously low in rating and value. In fact, I feel that they are too low to be ignored by any investor looking for the UK to correct its economy and its infrastructure too. Buying Costain shares, at 50p, puts them out on just 4.4 times pe ratio for 2023 and a mere 4.1 times the 2024 estimate. A correction in price back up to the 62p achieved in late April this year, looks more than achievable. |
Posted at 21/6/2023 15:45 by catabrit You’re ignoring valuation. At 62p this was not overvalued based on the FCF generation expected this year and beyond and the margin targets announced by management. For short-term tactical or trading purposes then yes, maybe selling at 60p odd made sense but if you’re a fundamental long term investor you’re not selling this at 62p.I would be utterly amazed if this falls to 30p. I could be wrong but I think the floor is net cash give or take a little bit. If you’re losing money net cash doesn’t offer much of a safety net, but if you’re making it, it usually does. The dividend has been dealt with in prior posts. They need to tackle the pension first before the resumption of a dividend. I agree it’s hurting Costain like it is all none yielding producing stocks as bonds are now a worthy competitor. I likewise agree re announcements albeit they’ve already stressed their confidence in FY23 twice since the annual results so what more can they do? If the share price was 55p no-one would be worried about lack of updates. It’s the drop in share price that’s causing frustration. It’s great to have people like Sikh around when things are at 10x sales or 30x earnings but at 60p this was like 2x FCF net of cash so hardly a demanding valuation. I don’t regret not selling at 62p at all. Lots of projects will get cancelled because of cost and whilst a shrinking pie isn’t what we want, we also have to recognise that there are some major contracts out there across rail, road and water that aren’t being discussed because it doesn’t fit the prevailing gloomy narrative. I do think management need to do a better job of telling their story to the market but to be honest, I quite like that they don’t and are focused on just delivering and letting the share price sort itself out in due course. This is a crucial year as it will be the first with clean numbers. We’ve already been told that the biggest risk - dodgy contracts - has been largely mitigated and so I think our net assets are protected and thus we’re paying nothing for good news which may or may not be forthcoming. |
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