Costain Share Discussion Threads

[catabrit] 14/3/2024 11:16

Looks like we are heading back to net cash folks.

[catabrit] 13/3/2024 17:14

In my opinion - and I hope I am wrong as I have a lot of money on the line here - the momentum has been lost and I do not anticipate these breaching the 70s again until we learn the results of the pension scheme which are a good 3-4 months' away. The results were solid if unspectacular but like a lot of small cap value stocks the only way to heaven (takeover aside which you can't underwrite) is through self-help i.e. buybacks, hitting margins, boosting free cash flow. If you believe (like the market does) that Costain isn't really that differentiated vs peers why buy it when you can buy the big gorilla (Balfour) which pays a higher dividend yield, is buying back a tonne of stock and offers downside protection via its infrastructure portfolio of investments (1.2bn) plus circa 800m of net cash vs a market cap of 2bn? I think it's going to be a frustrating couple of months.

[xamf] 13/3/2024 13:58

Finally sold today at 69p after a good run from Oct. Fundamentally a good company but frustrated with the lack of share buy back and director share buying. May take a punt again if this approaches 60p as I hope sentiment towards the sector will further improve on lowering interest rates/election (new construction) pledges. For now my exposure is in Kier.

[nigelpm] 13/3/2024 11:16

Good call.

Lots around cash/buybacks etc..

Will consider all options and may not need to fund pension scheme this year as deficit has gone.

[roguemale1] 13/3/2024 11:10

For me its divi first and a better profile in the City. Need a couple of new IIs buying to drive it along a bit.
And I know I've banged on about it but it would be really nice of Helen Willis dipped in her purse and bought some shares with her own money-sends a good message I think.

[roguemale1] 13/3/2024 11:04

Was anyone on the call this morning?

[catabrit] 13/3/2024 10:31

In my opinion buying back stock is a no-brainer. They should up the divi to a market FTSE all share level and also retire a tonne of stock.

[spooky] 13/3/2024 10:25

Thanks Catabrit, i am aware of that. Its a question of whether they should buy back shares rather than paying a dividend, it can be argued both ways.

[casholaa] 13/3/2024 10:06

"Progressive dividend - the Board recognises the importance of dividends for shareholders and expects to target dividend cover of around three times adjusted earnings. This will take into account the cash flow generated in the period, and the potential impact of the "dividend parity" arrangement relating to the defined benefit pension scheme, which continues until 31 March 2027."

[casholaa] 13/3/2024 10:02

Well, they are offering scrips so... not much point in thinking about buybacks just yet. I suspect scrips keep the cash in the coffers. I'll have the divi thanks, but, I would have been equally pleased if there was no divi given the lack of market interest after the divi was announced... hindsight and all that

On a trading note, the sma and wma are imho looking healthy dyor etc

[catabrit] 13/3/2024 09:58

We have covered this multiple times, Spooky. There is a matching requirement because of the pension i.e. if they buy back 20m GBP worth of shares they have to put 20m GBP into the pension. This matching requirement goes away if the pension scheme is in actuarial surplus and they will know whether that is the case at the end of March and will update the market in June / July once it is finalised. Then they are free to return more cash to shareholders via dividends and buybacks without needing to top-up the pension. It is a little complex and I get that but please follow the history of the thread and also go through the RNS history. It is all there.

[spooky] 13/3/2024 09:44

The CFO didn't answer the question relating to share buy backs clearly. I have no idea why they aren't buying back shares.

[pinemartin9] 12/3/2024 13:47

I would buy more if not so exposed, that's all that's stopping me trimming my holding a bit. It will need to get above 80p before I top slice a bit.

[casholaa] 12/3/2024 12:49

The other day, I noticed that there is a consensus page on their website. It gives projections of revenue. You may want to check it out.

[dickbush] 12/3/2024 12:21

I have room for more and will add even though I don't like buying up. Given it can achieve its Operating Margin targets over the next couple of years, it is either going to double or get bought out before it can.

[pinemartin9] 12/3/2024 11:42

I am sorely tempted...I'm in deep already though. A nice paper profit. I may average up...watching.

[cestnous] 12/3/2024 11:22

Just topped up my holding. can’t see it sitting here for very long. A conviction buy.

[catabrit] 12/3/2024 10:46

The muted share price reaction makes sense. They did not give new investors enough reasons to buy and so the results were baked into the share price I continue to hold and believe we are at an important inflection point in the business where the past is behind us and the future is in front of us. If they want to sell the future they have to do a better job of marketing / explaining it. We must not forget we are a piddly U.K. small cap that is far away from being included in the FTSE 350. We pay a tiny dividend. We have no buybacks in place. I believe that will change when the actuarial valuation is confirmed which will allow for more self help remedies.

We have one of the least promotional management teams I have come across and whilst that makes me sleep well at night we also need them to focus on marketing the house since we have spent so long fixing it.

You will note the high attendance at the annual meeting vs recent years. That suggests more interest in Costain amongst the sell side community as well as the banking / advisory side (since shareholders aren’t typically invited to these presentations).

This has to get adequately valued in the next 12 to 18 months or it will get taken out now that the market knows the legacy issues are well and truly behind the company.

[disc0dave46] 12/3/2024 10:27

Nice numbers, no complaints here.

[pinemartin9] 12/3/2024 10:11

The opportunity to bag a bargain! Hop on board.

[johndoe23] 12/3/2024 10:04

Just come across this morning, results look much improved. No share price reaction, seems strange. What an I missing?!

[spooky] 12/3/2024 10:01

Management very confident in presentation. Obviously there has been a seller around for a while but business execution has been good and the shares look far too cheap IMO.

[pinemartin9] 12/3/2024 10:00

Sometimes slowly slowly is the best way to go...People will wake up the value here. It's unwinding slowly.

[thags] 12/3/2024 09:38

great results no movement on the stock, typical since every man and his dog is chasing BTC and semi's