No anything less than 12p would be disappointing todays movement is poor considering Galliford Try figures and the market recovery. |
Is that 'adjusted' EPS of 12p? I think actual EPS is going to be around 8p or 9p. |
Looking forward to the results next week I hope that the eps will be 13p with improved cash position and a good forward order book so what will the price do? Let’s just say 12p for eps at 10x = 120p at 11x = 132p. As most of the info is already out there I can’t understand why the price doesn’t move very much and with the market performing well I would expect the share price to be higher or is that just wishful thinking. EPS this year (2025) could be 15-16p which could mean a price of 150-160p 50% higher than where we are now. |
Nice to be back to recent highs again at 110p. Much further to go IMHO.My personal target is 150 to 180p in next 12 months.Still see much higher share price to come as per broker ratings show as well. If Costain keep delivering and managing contract margins with contract collars to manage any inflationary issues can see this doing very well in 2025.In summary of 5 analyst ratings, which are all Strong BuyMin 115pAverage 138pMax 187pSource: https://www.tradingview.com/symbols/LSE-COST/forecast/ |
Gresham House commentary on COST @ 59min. |
 From HL -
Berenberg starts Costain at 'buy'
(Sharecast News) - Berenberg initiated coverage of construction and engineering group Costain on Friday with a 'buy' rating and 140p price target.
It said the company has overcome its recent challenges, as it improves both its profitability and its free cash generation, and it has strengthened its balance sheet, to the extent that in 2024 it was able to buy back shares for the first time in at least the past 10 years.
It pointed to a pipeline of revenue opportunities. Berenberg said there are significant infrastructure spending commitments in the coming years that it expects to benefit Costain.
"That it ended FY 2024 with a forward work position of £5.4bn, £1.5bn higher than the previous year, suggests the company is capitalising on these opportunities," it said.
"A strong order book not only underpins future revenue but should also enable greater discipline in contract selection and help Costain to pursue only those contracts with acceptable terms."
With this in mind, the bank said its base case is for group revenue to be broadly flat in the coming years, with growth in the Natural Resources division offsetting lower revenue in the Transportation division.
Berenberg also highlighted improving margins and reduced exceptionals.
"Earnings growth will, in our view, be driven by improving margins and fewer exceptionals," it said. "We expect margin growth to be driven by a combination of more higher-margin digital and consulting work, and the ending of older, lower-margin contracts."
It said improved controls were implemented in 2022 and should limit exceptionals.
It pointed out that management expects to achieve its target EBIT margin run-rate of 3.5% during FY 2024 and is targeting 4.5% during FY 2025 and more than 5.0% beyond that.
"These margins are not included in our base case, but we expect a circa 30% incremental benefit to EBIT if they are achieved."
Berenberg also cited the company's balance sheet strength, cash generation and the prospect of further returns.
"Costain's improving free cash flow profile will, in our view, enable it to grow its net cash balance, give the business optionality on further investment, and allow for further shareholder returns," it said.
"We believe Costain should make balance sheet strength an absolute priority, but we nonetheless expect its strong free cash generation to allow for further shareholder returns."
Finally, the bank said the stock's valuation is "undoubtedly cheap", trading at 7.3x FY 2025 price-to-earnings, 1.8x EBITDA and 2.4x EBIT, with an 11.4% free cash flow yield. |
Agreed eighthwonder. Share buybacks are mixed blessing. Reinvesting dividends is a painless way of increasing holding. First div should bring jump in share price |
Buybacks also benefit EPS etc which can often increase directors' bonuses. |
Buy backs facilitate shareholders to leave the register and I would prefer actions which encourage new permanent interest in the company, such as dividends. Furthermore, buy backs in smaller companies exacerbate liquidity issues. One reason why buy backs occur is that their brokers earn fees for undertaking them whereas they earn nothing from dividend policies. Cynical I know, but the brokers earn their money through advisory fees rather than share trading. |
Personally prefer a share buyback at these levels. |
Great summary. It does certainly highlight even now, how ridiculously undervalued Costain is! Which some of us have been stating for a while.There is an investor call at same time for anyone interested check Costain website. Encourage to attend or listen to recording. |
I'm wondering, based on cash position and pension situation still being neutral, that they'll either increase divi or another buyback.
At these share price levels another 10m buyback is more effective. IMO |
Already posted this, but worth re-posting.
Year end net cash projected to be 160m
EV of Costain is currently circa 118m
Operating profit projected to be between - £41.9m and £43.3m
Low single digit PER.
Results 11th March. |
Some big buys ?? |
No brainer comes to mind ! |
M.cap - 264m
End of year cash confirmed @ 160m
EV - 104m
Market guidance for +40m operating profit.
Do the maths on the PE here.
Wondering if they might start raising the div, results next month, if not, I'd expect another buy back announcement. |
I hope your right for your sake I’ll keep my fingers crossed for you |
I will walk naked through the streets of London if Costian share price is not well above £1.30 come end of 2025.....and that's not a pretty sight i can tell ya |
Where does this share price go from here the good news is out(recent trade update) government spending and brokers forecasts are positive I am hoping that eps will be 13p for 2024 this year could be 14p but as the market values these companies on a low ratio of 7-8 times it’s hard to see how the price will go up to 150-160 that would assume eps of close to 20 so imo the price will trade between 90-100 for this year not withstanding any major market movements |
Totally agree Sophia so undervalued still. Have a large holding but may add some more at these prices if it doesn't start moving north.As before when some of us patiently awaited when languishing around 50p levels, same here this will rise again to higher levels starting to reflect a proper evaluation. My initial target is 150 to 180p range for next 12 months.FYI 4 analysts covering this stock. All Strong Buy ratings with targets with min estimate of 115p and max 187p, with average 139p 12 month share price forecast.https://www.tradingview.com/symbols/LSE-COST/forecast/Sit tight and hopefully we will all have made a nice 50% increase in the value of our Costain holding by Christmas. Let's see how the year pans out. Good luck a?l. |
Please note: 7.9% of NAV!. That is huuge conviction |
From Ennismore Fund's newsletter
Costain Group Plc – UK engineering and construction company (7.9% NAV)
Costain Group Plc is a GBP 288m market capitalised UK construction company focussed on infrastructure and regulated
sectors, especially in the Transportation segment i.e. mainly road and rail (71% of 2023 revenue) with the remainder in
the Natural Resources segment; water, energy, and defence. The increasing capex requirements for the water industry to
upgrade their Victorian era infrastructure should be a key tailwind going forward, as well as work linked to carbon capture
projects in the longer term. The decision to finish the HS2 project in Euston rather than Old Oak Common is also helpful.
They don’t have any fixed price work and lean to open book framework contracts, which should lead to stable margins
overall. They target over 5% medium term operating margin, helped by higher margin consultancy and engineering work
and we think these targets are attainable. Their margin is also assisted by exposure to “green” areas such as the multi-
GBP billion carbon capture and storage project recently confirmed where they tend to be on the consultancy and project
management side rather than contract delivery.
We see operating profit of around GBP 48m this year, growing by over 10% and with sector leading margins. They are
currently buying back stock which we see as sustainable and alongside the dividend leads to return to shareholders of
around 5 percent a year, but we think these could easily step up. We expect around net cash of GBP 150m adjusted for
the negative working capital on the balance sheet. Placing a multiple of 8 times operating profit post tax plus adjusted
cash gives upside of over 45% to 160p to the end of 2025. |
What was the outcome? |
Hopefully Reeves announcements today on increased infrastructure spending to get UK growth started will be furtger good news for Costain |
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