Costain (LON:COST) – moving higher ahead of its Interims within a few weeks

08.07.2025

After hitting 151.40p just eight days ago, the shares of this £400m-capitalised infrastructure solutions group have eased back to 142p before creeping slowly better again.

Now at 146.40p, just 5p short of its recent All-time High, they look capable of breaking back above that level and even higher before the group announces its Interim Results to end-June on Wednesday, 20^th August.

The company, which offers a range of services across the whole lifecycle of its customers' assets, operates through two segments: Natural Resources and Transportation.

It offers various services, such as consultancy and advisory, digital technology solutions, and complex program delivery.

Costain helps to shape, create and deliver pioneering solutions that transform the performance of the infrastructure ecosystem.

It is focused on four strategic markets in the United Kingdom: transport, water, energy, and defence.

The business is involved in research and development in its highways, integrated transport, aviation, energy, defence, water, and rail sectors.

Its energy services include energy transition, oil and gas, electricity and gas networks, and industrial cooling.

The sectors it operates in are rail, integrated transport, road, water, aviation, and defence and nuclear energy.

Upon announcing its H1 Trading Update three weeks ago, CEO Alex Vaughan stated that:

"Over the past three years we have executed on our strategic plans, improved the quality and size of the Group's contract portfolio, delivered on our margin targets, significantly strengthened our net cash position and successfully refinanced our bank and bonding facilities, giving the Group the financial strength and capability to support its future growth opportunities.

We have increased our net cash position from £123.8m at the end of FY 22 to £158.5m at the end of FY 24, including the resumption of dividend payments towards our target earnings cover, the £10m share buyback programme in FY 24, and investment in our people and systems.

Accordingly, with our defined benefits pension scheme in surplus for the second consecutive year, we are pleased to announce a further share buyback programme that is consistent with the Group's capital allocation framework."

Analysts at Panmure Liberum rate the group’s shares as a Buy, with a Target Price of 170p.

They look for current year, to end-December, sales at £1,260m (£1,251m) and pre-tax profits of £52.0m (£48.5m), lifting earnings to 14.4p (14.4p) and paying a dividend of 2.5p (2.4p) per share.

For 2026 they see £1,275m revenues, £56.4m profits, 15.9p earnings and a 2.9p dividend.

Some £1,413m of turnover in 2027 could show £63.0m profits, 17.7p earnings and with a 3.2p dividend per share.

This group is very well-positioned to expand still further its massive record £5.4bn order book over the next few years.

It has a third of its £400m market capitalisation in net cash.

These shares remain totally undervalued, so just watch them rise above that 151.40p very shortly.

Costain Defence

(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.