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COST Costain Group Plc

67.60
2.60 (4.00%)
Last Updated: 10:04:07
Delayed by 15 minutes
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
  2.60 4.00% 67.60 27,703 10:04:07
Bid Price Offer Price High Price Low Price Open Price
65.60 67.60 67.60 65.60 65.60
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Hghwy,street Constr,ex Elvtd 1.42B 25.9M 0.0936 6.94 179.85M
Last Trade Time Trade Type Trade Size Trade Price Currency
10:04:07 AT 927 67.60 GBX

Costain (COST) Latest News

Costain (COST) Discussions and Chat

Costain Forums and Chat

Date Time Title Posts
18/3/202411:01Costain3,514
10/1/202411:44UNDERVALUED GOOD recovery play.. COSTAIN6,509
25/11/202019:33Rishi Sunak's National Infrastructure Strategy for Ј100 billion of long-term inv6
17/4/202013:35COSTAIN - PE of 28
24/4/201307:47*** Costain ***13

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Costain (COST) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
10:04:0767.60927626.65AT
10:03:5865.605,0003,280.00AT
10:03:5365.635,0003,281.25O
10:00:1165.6410,0006,563.89O
09:22:5766.853,3122,214.10O

Costain (COST) Top Chat Posts

Top Posts
Posted at 19/3/2024 08:20 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 65p.
Costain currently has 276,684,741 shares in issue. The market capitalisation of Costain is £179,845,082.
Costain has a price to earnings ratio (PE ratio) of 6.94.
This morning COST shares opened at -
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 07/3/2024 13:43 by catabrit
Kier results presentation is worth watching. Solid margins within the infrastructure division and none of the infra-based contracts are fixed cost anymore. CEO stressed that the entire listed peer group has been conservative and responsible when it comes to bidding and it has not had any impact on competitiveness. It still amazes me that people keep referring to Costain as a construction company when the business increasingly looks quite different to the peer group. Construction and property are pretty big businesses at Kier and carry more risk. (Not Kier bashing by the way as I think the equity has quite rightly inflected upwards and has further to go.)

We are so absurdly undervalued and even quite seasoned commentators (investors) such as Paul Hill over at Vox Markets mistakenly view Costain as a low margin, high risk construction company. When that perception starts shifting we are going to fly.
Posted at 27/2/2024 15:21 by the count
--->ALL

I take it you have all seen the news today?

hxxps://uk.advfn.com/stock-market/london/costain-COST/share-news/Costain-Group-PLC-Investor-Presentation-via-Investor-Meet-Company/93366293

They will be giving an investor presentation on 13th march starting at 10am.

Regards,

TC!
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 08:52 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 25/8/2023 13:57 by grahamburn
Headline, first para, concluding 2 paras and final recommendation from Tempus in Times (plenty of known detail in between):

Costain, the builders’ ugly duckling, may fly again

There is nothing like the whiff of a dividend to set investors’ adrenaline pumping, even from, well, a mixed set of results. That is what the builder Costain delivered on Wednesday, and the package has been well received since. The shares jumped from 46½p on Tuesday — ahead of the official announcement — to nearly 53p at one stage yesterday. They are coming out of intensive care, where they have lain since the pandemic, so it may be time to examine the company anew.

So there is plenty going on, and signs that the current management is getting to grips with the headaches that have plagued the group in recent years. However, the comparison with the near-rival Balfour Beatty is instructive: both are in HS2, but Balfour is valued by the stock market at ten times Costain, on revenues five times larger and much more widely spread, including to the US. Balfour has paid dividends through and since Covid. But this is a reverse beauty parade. It begins to look increasingly that Costain, the ugly duckling, has been shamefully neglected by the stock market, leaving the share price appearing anomalous and set for recovery.

On the back of pre-tax profits rising from £40 million-or-so this year, they should get close to £50 million for 2025. At current levels, the shares are trading on less than four times earnings two years hence, while the dividend yield is set to rise to about 2.8 per cent. That p/e ratio must surely blossom.

ADVICE Buy
WHY Unjustifiably overlooked after a long period in the doldrums
Posted at 24/8/2023 16:33 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-linked revolving credit facility, and surety and bank bonding facilities totalling £270m, with the reduction in facilities reflecting the group’s positive cash generation and cash position.

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 14:45 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.
Costain share price data is direct from the London Stock Exchange

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