Keller Group – the AGM Trading Update in May guided a strong start to the group’s year, Interims tomorrow, shares 1318p, Brokers TP 2040p

04.08.2025

Tomorrow morning, Tuesday 5^th August, will see Keller Group (LON:KLR) the world’s largest geotechnical specialist contractor, declare its Interim Results for the six months to end-June.

I am not expecting any surprises, but I do anticipate comment from the company on its confidence as its progresses in its second-half year, which is generally its better trading period.

Currently the group’s shares are trading at around 1318p, valuing the business at some £960m, which looks inexpensive to me.

The Business

Keller Group is a UK-based geotechnical specialist contractor providing a portfolio of advanced foundation and ground improvement techniques used across the entire construction sector.

The company's geographical divisions include North America, Europe, and Asia-Pacific, Middle East and Africa.

The group’s expertise includes ground improvement, grouting, deep foundations, earth retention, marine, and instrumentation and monitoring.

Keller’s solutions include improving bearing capacity; low-impact, low-carbon construction; containment; excavation support; stabilisation; marine structures; seepage control; slope stabilisation; and monitoring.

The company’s improve bearing capacity solution includes bearing capacity/settlement control, heave control, heavy foundations, liquefaction mitigation, re-levelling structures and underpinning.

Its marine structures solution includes the design and construction of new ports, jetties and quays as well as the extension and restoration of existing structures.

The group, which can trace its roots back to 1860, operates on five continents, employs some 10,000 people, has made 27 acquisitions in the last 25 years, works on an average 5,500 contracts each year and has a 12% market share globally.

Keller’s revenues grew 1% in 2024 to £2.98bn, with pre-tax profits up 46% to £184m.

Latest Trading Update

On Wednesday 14^th May, the group provided a trading update for the first four months of its trading year to end-April, it stated that it was on track to achieve its expectations for fiscal 2025.

The geotechnical specialist contractor noted its recent consistent operational and financial performance and strong order book, while anticipating a typical second-half weighting.

The company added that it has limited direct exposure to the US tariffs because of its localised services and supply chain, though it remains mindful of current macroeconomic uncertainty and the potential impact of tariffs on economic activity generally, along with any future US tax changes and a foreign exchange headwind that could build if the USD weakens further.

The Equity

There are some 73.1m shares in issue.

The larger holders include FIL Investment Advisors (9.26%), Old Mutual Investment Group (5.81%), JP Morgan Asset Management (5.00%), JO Hambro Capital Management (4.98%), Schroder Investment Management (4.94%), Schroder Investment Management (4.94%), Dimensional Fund Advisors (4.89%), Artemis Investment Management (4.88%), Franklin Templeton Institutional (4.78%), Baillie Gifford (4.56%), and Aberdeen Investment Management (4.31%).

Analyst Views

There are five analysts that follow the company, four of whom rate the shares as a Buy, while the other says Hold.

A consensus of the analysts suggests that the average Target Price is 1945p, while the lowest is for 1660p, and the highest 2250p.

Consensus analyst estimates averages show 2025 revenues of £3,076m, with underlying operating profit of £215.0m, generating earnings of 201p per share.

For 2026 they look for £3,202m revenues, £224.0m profits and 213p earnings per share.

For 2027 the consensus is revenue of £3,310m, profits of £231.0m, with 223p of earnings.

The group’s shares are ‘too cheap’ given the positive momentum behind the geotechnical engineer, according to Panmure Liberum.   

Analyst Joe Brent has a Buy rating on the stock with a Target Price of 2040p.

Commenting upon the group having reported that CEO Michael Speakman will step down this month, with ex-Wincanton CEO James Wroath taking the position, Brent noted that Wroath brings a wealth of relevant experience.  

“That experience will be needed given some of the macro data recently has been challenging, particularly in North America.  

We maintain our Buy recommendation and Target Price of 2040p: a current year 2025 price-to-earnings of 7.4 times is too cheap given the positive momentum.” 

In My View

I have followed this company since it went public in May 1994 and continue to rate it as a ‘class operation’ while holding the view that its shares are looking very undervalued.