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COST Costain Group Plc

-0.20 (-0.31%)
08 Dec 2023 - Closed
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
  -0.20 -0.31% 64.60 527,332 16:35:10
Bid Price Offer Price High Price Low Price Open Price
64.80 65.00 65.00 63.20 64.80
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
18:11:25 O 1,596 64.598 GBX

Costain (COST) Latest News

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Date Time Title Posts
25/11/202019:33Rishi Sunak's National Infrastructure Strategy for Ј100 billion of long-term inv6
03/9/202007:33UNDERVALUED GOOD recovery play.. COSTAIN6,508
17/4/202013:35COSTAIN - PE of 28
24/4/201307:47*** Costain ***13

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Costain (COST) Most Recent Trades

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Posted at 10/12/2023 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 64.80p.
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 64.80p
Posted at 21/11/2023 15:20 by sphere25
Someone is having fun on the order book smashing through the sell orders on the offer. It is that buy order of 83,971 currently sat on the bid at 57.8p. It has mostly beeen responsible for the pop from the mid 56p mark to the current price of 58.6. It might have another lurching dive soon into the sell orders on the offer, causing another cascade type clear out of sell orders.

It's abit kamikaze type stuff, but who cares when it's on the right side of the book!

It almost looks inevitable now for a lob at or just above 60p. Most traders and the market will naturally be watching that key 60p mark now. Very strong resistance here at COST.

It would be nice to see it crack. It feels different out there in the market. It isn't fireworks, but there are some gradual bullish trends and more optimism. It feels less difficult to hold on to trades too. Just let them run, maybe a nice bullish move toward year end?

Still better than just watching the majority keep going down!

Have to see if that feeds through to COST here. A slow gradual trend might cause a break of 60p for a real bullish break out, but it is a tricky call, so not getting the hopes up too much.

Roll on more kamikaze type buy orders!

All imo

16:35 UPDATE: That buy order got filled but then there was still a buyer in size with 10k icebergs at 57p, unfilled into the auction. Then a 400k (irregular for COST) buy order went unfilled in the auction at 57p for an uncross and close at that price.

28th November 08:03 UPDATE: Tipped by Questor with the headline: "This company has £167m in cash yet its market value is just £157m". Price now testing that very tough to crack key 60p mark.
Posted at 05/11/2023 10:53 by catabrit
It could be anything, a redemption from one of the larger funds perhaps. Someone just throwing in the towel and reallocating towards cash or fixed income or higher yielding equities. You just never know. Curious to see where we open tomorrow.

Most likely is that it’s nothing and business as usual. I mean it’s not far off from the amount of shares I personally own and I’m a nobody.

Regarding the share price it is hard for me to believe we gap down to below net cash. I just don’t think the uncertainty with Costain’s story exists as much as it did in 2021/2022. The chartists can say what they want and I’m not trying to tarnish their trade as there’s a lot of good that comes out of technical analysis. But below net cash just feels too penal considering what management have publicly come out and told us re margins, no more fixed price contracts, depth and quality of work, dividend, pension agreement etc. None of that was known a year ago - it was all inference.

Either way, I’m off to the Himalayas this month and the wifi in the Khumbhu is patchy at best so I hope that when I get back I see something starting with a 6 but I won’t be holding my breath!
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.

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 23/8/2023 08:32 by catabrit
The last time I fell in love was with Apollo Global Management at $12. That was a very happy experience considering the current share price of $81.50 :)

Since I invested, Costain has hit every expectation with the exception of margins which I expected to be a bit better in H1.

- no bad contracts (18-months and counting)
- strong net cash (£132m and growing).
- resumption of dividend (imminent).
- pension settlement (done).
- good FCF generation.
- good share price performance (up from my 40p basis, up 25% over 1yr vs down -3% for the FTSE all share).

Those are the facts. And the facts support staying together so I’m happy to stay married.
Posted at 17/8/2023 12:34 by catabrit
Share prices rise and fall depending on whether reality meets, exceeds or falls short of expectations. I think it’s fair to say that at 46p odd, expectations here are very low and thus any good news - on buybacks, dividends, net cash, free cash flow, margins and the order book - will be well received. Management and IR have guided for the order book to be essentially flat over the coming years and what we know is that they’re very conservative.

There’s probably a lot of stretch in that order book both on the down and the up and if I had to hazard a guess, I’d say there’s more in the latter.

Look no further than the GHD deal recently announced. Not an RNS because Costain provision for things based on certainty - not probability. There’s a lot of potential in that contract and the upside could be significant depending on who gets what.

Provided there’s no claim on the net cash, I think it acts as a firm floor on probable downside and the great thing for us is that it’s growing by £20m a year odd.

Volumes have been very weak as it’s summer and the whole U.K. small cap market is in the doldrums at the minute so I don’t think it’s wise to draw too many conclusions from the muted share price

All IMHO and I could easy be wrong.
Posted at 06/7/2023 15:55 by catabrit
I’m not sure how true that is. Perhaps you know better than I do but based on the annual reports I’ve gone through (quite a few!), consulting comprises at least 1/3 of total staff and about the same in terms of operating profit. Pretty sure that all of natural resources is consulting-led for example.

And the plan is to get to a position where 50-55% of operating profit is consulting (hence the medium term margin targets they provided in March).

If you read the comments from recent senior hires (so last three years), many of the people joining state the same thing;

1). They like the mix of complex delivery, consulting and digital.

2). They like how inclusive Costain is vs peers. Go and look at Kier and Balfour and you’ll struggle to find the same amount of women in senior positions, likewise the composition of the board.

So for me, Costain is looking to future proof the business and skate to where the puck is going.

I’m fine with complex delivery provided it’s not fixed price contract-led and whilst I wasn’t sure what the situation was when I originally invested last year (I assumed they were more risk averse based on the transcripts etc), the confirmation of it in March really gave me a lot of confidence.

Galliford Try traded at a negative EV and my position size was tiny vs this because I felt Costain was safer, operationally.

Consulting is much higher margin and lower risk so would command a better multiple. If we had zero complex delivery and the same net cash and this was a pure play infra consulting biz, I reckon we’d be looking at a share price maybe 50-100% higher - even with the lower operating profit. I.e. we’d get more credit for our fortress balance sheet.

We get zero credit for it at the minute and I think that’s because people are still worried about nasty surprises from new contracts - despite assurances from management.
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.
Posted at 23/3/2023 11:45 by sikhthetech

"Forget the share price moves."

Absolutely. That's what I do. I've been investing in different asset classes, for around 40yrs.

Whenever there's news, company/sector, I look at the share as if I'm a new investor. If I think the company/sector newsflow is good for the share then I'll buy or add (if I already own). If I think the company/sector newsflow is not good then I'll sell/top slice.

I try and predict where I think the market, share is going months ahead.

Currently, I consider COST a share to trade.

Look at ex-blnx(renamed rthm and merged with tap/trmr), Byot, Hvo, TW, PSN, housebuilders, banks.

Re Imastu, he was wrong on TW and housebuilders and got upset as he was buying all the way down as share price fell, whilst I shorted. TW share price did crash as I predicted.

He does still post.
Costain share price data is direct from the London Stock Exchange

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