Costain (LON:COST) – is something going on or is the market at last realising that its shares are cheap?

16.07.2025

I have noticed a gentle nudging ahead of this infrastructure solutions group’s shares over the last few days.

After touching a 5-year High at 153.20p at one stage yesterday, they closed last night at 152p, after well over 1m shares were traded.

The group’s First Half results are due to be announced on Wednesday 20^th August, we already know that they will show through positively.

A month ago, on Monday 16^th June, the group’s H1 Trading Update for the six months to end-June, guided that trading had remained in line with the Board's expectations for FY 25.

It stated that the group retains a strong, high-quality forward work position that is more than four times annual revenue and is busy bidding further new work across all sectors.

Analysts Joe Brent and Joe Walker, at Panmure Liberum, who rate the group’s shares as a Buy, with a Target Price of 170p, are looking for the pre-tax profits to end-December to increase to £52.0m (£48.5m), then rising to £56.4m next year.

Estimated earnings in 2026 of 15.9p would put the group’s shares on less than a ten times prospective basis.

That is far too low a rating for a £412m-capitalised group, boasting such a mega-strong order book and around £160m cash at bank.

(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*)

Asterisks * denote that Target Prices have been achieved since Profile publication.