It really does feel as though this group’s shares are on the upward trajectory.
On Monday of last week, I wrote about this leading UK construction group following its Final Results to end-June, released a few days before.
The Business
It was created through a merger in 2000 of two businesses: Try Group, founded in 1908 in London, and Galliford, founded in 1916.
Originally a housebuilder, it sold its housing businesses to Bovis Homes, subsequently renamed Vistry Group, in January 2020. Prior to the sale of its housing arm, it was ranked fifth largest by turnover among UK construction companies in 2019.
Now operating as Galliford Try and Morrison Construction, the Uxbridge-based group carries out building and infrastructure projects with clients in the public, private and regulated sectors across the UK and is focused on the building, highways and environment markets.
The Final Results
Its figures showed revenues 27.2% ahead at £1,772.8m (£1,393.7m), while its pre-exceptional pre-tax profit was 39.7% higher at £32.7m (£23.4m), boosting earnings 47.6% to 27.9p (18.9p), and its dividend some 47.6% better at 15.5p (10.5p) per share.
The company also reported that its average month-end cash balances were 14.9% up at £154.8m (£134.7m), while its Order Book was edging 2.7% higher at £3.8bn (£3.7bn).
The group was boosted by more building and infrastructure work – with the building division benefiting from public sector spending.
At that time of the results, CEO Bill Hocking stated that:
"Galliford Try has delivered another year of sequential, robust revenue and margin growth.
Our strong progress, well ahead of plan, provided us with the confidence to reset our ambitions over the mid-term, and to announce our updated Sustainable Growth targets to 2030 at the Capital Markets Event held in May 2024.
Our commitment to risk management, careful contract selection and operational excellence underpins the consistent year on year performance and our future prospects.
The UK's planned, and required, investment in economic and social infrastructure continues to support growth in our chosen markets; and our confidence in the Group's outlook is supported by our carefully selected, sector focused, high quality order book which provides visibility and security of future workloads.
We will continue doing what we said we would do, consistently delivering strong performance - supported by our professional teams, a strong balance sheet, solid order book and excellent supply chain and client relationships.
We are confident in the outlook for the current financial year, with 92% of FY25 revenue already secured, and are encouraged by our recent framework and sector wins which align with our strategy to 2030 and underpin the opportunity to deliver further strong performance and sustainable long-term value for all stakeholders."
The group’s shares were then 327p, with my comment that shareholders should hold tight, staying hopeful of further good news to help the shares continue to rise in price.
Last night they closed at 356p, up nearly 7% on the day on the back of more than trebled average daily dealings, with some 468,987 shares traded.
Broker Views
Analyst Joe Brent at Panmure Liberum rates the shares as a Buy, with a Price Objective of 415p.
His estimates for the current year to end-June 2025 are for £1,823m sales, profits of £35.0m, earnings of 25.6p and paying a 14.8p per share dividend.
For 2026 he sees £1,873m revenues, £37.9m profits, 28.1p earnings and a 16.3p dividend.
Based upon the extending Order Book, jumping even further ahead in 2027 he goes for £1,961m turnover, £41.7m profits, earnings of 30.8p and a 17.8p dividend.
At Cavendish Capital Markets, its analysts Guy Hewett and Max Hayes have a Price Objective of 417p.
They estimate lower current year sales of £1,672.6m, but with higher profits of £36.0m, 24.9m earnings and a 12.2p per share dividend.
For 2026 their figures suggest £1,700.5m sales, £40.2m profits, 27.8p earnings and 13.8p per share in dividend.
Perhaps the least optimistic in share price terms is analyst Andrew Nussey, at Peel Hunt, who reiterated his Buy tag, with an increased Price Objective from 350p to 380p for the shares.
Noting that the full-year pre-tax profit of £32.7m was ahead of consensus with ‘strong revenue and margin progression’, he considered that group was in great shape and the shares are offered excellent value.
The outlook was confident, he stated, with the strengthening order book underpinning visibility and with the management reiterating its 2030 growth aspirations as well as launching a £10m share buyback.
Noting the group’s continuing positive momentum and its strategic progress, the analyst increased his full-year 2025 pre-tax profit from £30.7m to £34m.
My View
I continue to feel very positive about the prospects for Galliford Try, and expect to see its shares at 356p, now at a five-year High, soon breaking above the 400p level.
Hold very tight.
(Profile 02.02.22 @ 178p set a Target Price of 220p*)
Comments