Costain – this week’s AGM Update could well push its shares, now 194p, to a new six-year High and then even higher!

Mark Watson-Mitchell - 11.05.2026

Next Thursday, 14^th May, Costain Group (LON:COST), the £528m-capitalised UK construction and consultancy group, will be holding its AGM to cover its 2025 Report & Accounts.

Ahead of that afternoon meeting the group, which is a leading player in the UK infrastructure sector, will issue an AGM Trading Update statement – which should be very positive in tone and content.

Certainly, it is felt that the message therein could help to push the group’s shares a lot higher than the 194p level at which they closed on Friday night.

Just a month ago the group’s shares were up to 206p, since when they eased back to 174p before recovering ahead of the AGM.

Creating A Sustainable Future

“Together we shape, create and deliver solutions that transform the performance of the infrastructure ecosystem.”

Costain has been improving the lives of people through infrastructure for more than 160 years.

Today it is solving some of the UK’s most complex infrastructure challenges across the transportation, water, energy and defence markets.

The group claims that its market focus remains on the critical national infrastructure that meets essential needs and that its strategic focus remains on long-term relationships with customers who seek to partner with Costain for significant support across the lifecycle of their assets.

It expects that this focus will result in the delivery of sustainable, profitable growth over the medium term.

Through the delivery of predictable, best-in-class solutions across the transport, water, energy and defence markets, it is creating a sustainable future and securing a more prosperous, resilient and decarbonised UK.

Over the last three years, the group has been implementing a programme of operational improvements, the results of which are beginning to show through with higher margins and securing increased contracts.

The 2025 Results

On Tuesday, 10^th March, the group reported a strong performance for the year to end-December 2025, with adjusted operating profit increasing by 9.3% to £47.1m and an improved adjusted operating margin of 4.5%.

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 £20m 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

When announcing the group’s 2025 results, 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.

As we return to the FTSE 250, thank you to everyone in the Costain team for their valued support.

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."

The Equity

There are some 267.9m shares in issue.

Around 67% of the equity is held by investment institutions.

The larger holders include UBS Asset Management (9.19%), Gresham House Asset Management, Investment Management (8.39%), Gresham House Asset Management (5.64%), JO Hambro Capital Management (5.04%), FIL Investments Advisors (UK) (4.76%), KBI Global Investors (3.16%), OP Asset Management (3.05%), BlackRock Investment Management (1.92%) and HSBC Global Asset Management (UK) (1.29%).

Brokers Views

The consensus from six analysts who follow the group closely, suggests that for the current year they estimate the group will report £1,233.2m of revenues, £50.5m of adjusted operating profit, with earnings of 15.1p per share, while the group’s net cash position at the year-end could be £180.5m.

For 2027 their figures are for £1,398.5m of revenues, £58.2m profits, 17.5p of earnings and £195.7m year-end cash.

The estimates for 2028 look for £1,487.0m revenues, £62.4m profits, 18.6p earnings and a very healthy £219.1m of net cash at the year-end.

The average Target Price is 229p, the Highest 297p, the Lowest just 200p.

The most bullish opinion comes from analyst Max Hayes, at Cavendish Capital Markets, with that 297p TP.

“We expect a strong earnings recovery, showing a >20% rebound in revenue in FY26E, supported by accelerating Natural Resources activity and a stabilisation in Transportation volumes.

Operating margins are forecast to progress towards >5% over the medium term, while adjusted EPS is expected to grow at a mid‑teens CAGR.

Strong free cash flow generation underpins increasing dividends, buybacks and continued balance sheet strength. 

Despite the shares trading at their highest level since 2019, Costain remains valued at a c35-45% discount to peers on blended FY26-27E EV/EBIT of 6.1x.

We believe this undervalues the quality and visibility of earnings, structural margin progression and enhanced income profile following the removal of pension funding constraints.

With a growing dividend and buybacks supporting a >7% total shareholder yield, we see further scope for re‑rating.”

My View

There is a very attractive market backdrop for Costain, especially considering its record forward work position, as well as the improved quality of its business and the strong balance sheet, the group is very well placed to deliver sustainable, profitable growth over the medium-term.

The group is confident of delivering further progress this year, with a step-change in performance in 2027 and beyond.

It has a very strong net cash position, while its progressive dividend and share buyback programme are creating substantial value for shareholders.

Its shares are primed ready for a big lift over the 200p level, with the 240p-260p trading range possible in the near future.

(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)