Costain Group - Order Book now up to record £7bn (£5.4bn), £189m cash on balance sheet, shares up 10% at 186.60p

Mark Watson-Mitchell - 10.03.2026

This morning Costain Group (LON:COST) has reported a strong performance for 2025, with adjusted operating profit increasing by 9.3% to £47.1m and an improved adjusted operating margin of 4.5%.

Revenue for the year was £1,045.7m, down from £1,251.1m in FY 24, primarily due to a reduction in the Transportation sector offset by growth in Natural Resources.

The company achieved a record forward work position of £7.0bn, representing a 30% increase and nearly seven times its FY 25 revenue, providing significant visibility for future growth.

Strong cash generation resulted in a net cash balance of £189.3m, enabling increased shareholder returns, including a planned £20.0m share buyback programme in FY 26 and a proposed final dividend of 3.2p per share.

Revenue for the year was £1,045.7m, down from £1,251.1m in FY 24, primarily due to a reduction in the Transportation sector offset by growth in Natural Resources.

Management Comment

CEO Alex Vaughan stated that:

"I am pleased to report another strong performance, with 9% adjusted operating profit growth and a 4.5% adjusted operating margin.

Strong cash generation has resulted in a strengthened balance sheet and supports increased shareholder returns, with confirmation that we will proceed with a £20m share buyback programme in FY 26 and implement our target dividend cover of 3x adjusted earnings.

The Group is strongly positioned in structurally growing markets where significant long-term investment is being made to meet critical national needs, and where we work in long-term collaborative partnerships with an increasing number of customers.

Our forward work position has grown by 30% to a record £7.0bn, almost seven times FY 25 revenue, giving good visibility of future work and, combined with our strong balance sheet, underpins our confidence in delivering revenue and operating profit growth in FY 26 and a step change in performance in FY 27 and beyond."

Broker Views

Max Hayes, at Cavendish Capital Markets, states that:

"Costain trades on a blended 11x P/E across CY26E and CY27E, a 10% discount to peers, widening to a 35% discount on EV/EBIT of 5.0x.

We see material scope for re-rating, with its exposure to high-growth verticals with long-term visibility where spend is secured, and strong shareholder returns – as demonstrated by today's results – driving share price upside."

At Panmure Liberum analysts Joe Brent and Joe Walker state that:

"A CY 26 P/E of 11.0x and P/E on target EPS of 7.7x are simply too cheap given £189m of cash on the balance sheet.

BUY, TP 190p

We retain our BUY and target price of 190p based on a SoTP.

Given the complexity of lease accounting, we believe that EV/EBITDA is a good way to value construction businesses.

The shares are trading on a P/E of 7.7x, assuming recovered FD EPS of 22p.

It is simply too cheap given the exposure to the strong infrastructure outlook in the UK and the Energy Trilemma, and expected cash on the balance sheet."

My View

These shares are a bargain at 186.60p.

(Profile 05.09.19 @ 155p set a Target Price of 250p)

(Profile 02.08.21 @ 55p set a Target Price of 69p*)

(Profile 24.08.23 @ 50p set a Target Price of 62p*)

(Profile 20.08.25 @ 139p set a Target Price of 175p*)

(Profile 21.01.26 @ 160p set a Target Price of 199.50p)

(Profile 02.03.26 @ 182p set a Target Price of 210p)

Costain Defence