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Babcock International
(LSE:BAB)
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Rating:61Neutral
Price Target:
1,060.00 p
▼(-15.57% Downside)
Action:Reiterated
Date:06/24/26
The score is driven primarily by a recovering financial profile with improving profitability and solid recent cash generation, reinforced by a constructive earnings call with reaffirmed guidance and strong cash conversion. These positives are tempered by balance-sheet leverage, weak technical momentum (price below major moving averages and negative MACD), and a valuation that looks relatively expensive with a low dividend yield.
Positive Factors
Improving cash generation and conversion
Sustained improvement in operating and free cash flow with 84% cash conversion strengthens the firm's ability to de‑leverage, fund capex, and support buybacks/dividends. Durable cash generation reduces refinancing risk and increases strategic optionality over the medium term.
Negative Factors
Elevated leverage relative to equity
Material gearing leaves the company more exposed to refinancing and interest‑rate swings, constraining strategic flexibility. High leverage makes results and shareholder returns sensitive to even moderate earnings setbacks, increasing downside risk over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Improving cash generation and conversion
Sustained improvement in operating and free cash flow with 84% cash conversion strengthens the firm's ability to de‑leverage, fund capex, and support buybacks/dividends. Durable cash generation reduces refinancing risk and increases strategic optionality over the medium term.
Read all positive factors
Babcock International (BAB) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£4.96B
Dividend Yield0.56%
Average Volume (3M)2.10M
Price to Earnings (P/E)23.8
Beta (1Y)1.42
Revenue Growth7.17%
EPS Growth-14.18%
CountryUK
Employees28,343
SectorIndustrials
Sector Strength72
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.42
Shares Outstanding492,748,570
10 Day Avg. Volume1,837,437
30 Day Avg. Volume2,099,800
Financial Highlights & Ratios
PEG Ratio-1.93
Price to Book (P/B)9.46
Price to Sales (P/S)1.12
P/FCF Ratio22.06
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,382.86Price Target Upside10.14% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)0.65
Revenue Forecast (FY)£5.49B
Babcock International Business Overview & Revenue Model
Company Description
Babcock International Group PLC is a prominent provider of specialized services to the aerospace, defense, and security industries, operating globally with a presence in the United Kingdom, Europe, Africa, North America, and Australasia. The compa...
How the Company Makes Money
Babcock primarily makes money by delivering long-term, contract-based engineering and support services, with revenue largely recognized as services are performed over the life of multi-year agreements. Key revenue streams include: (1) Defence and ...
Babcock International Earnings Call Summary
Earnings Call Date:Jun 22, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 19, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive picture: strong organic growth, margin improvement, robust cash generation and shareholder returns, and clear strategic opportunities (nuclear, AUKUS, exports). The main negative element is the Type 31 program cost reestimate (GBP 140m charge) and some sector-specific headwinds (Land revenue decline, infrastructure revenue phasing, and a lost Swedish export opportunity). Management has absorbed the Type 31 charge within guidance and reconfirmed medium-term targets, and balance-sheet strength and cash metrics mitigate near-term risks.Positive Updates
Strong Organic Revenue Growth
Organic revenue growth of 8% year-on-year (8% after Type 31 reversal, 10% before), outperforming mid-single-digit target and driven by Nuclear, Marine and Aviation.
Negative Updates
Type 31 Cost Reestimate and GBP 140m Charge
Revised cost estimate for Type 31 program resulted in a GBP 140 million charge due to higher-than-expected rework and rectification costs and slower-than-planned productivity on outfitting.
Read all updates
Q4-2026 Updates
Positive
Negative
Strong Organic Revenue Growth
Organic revenue growth of 8% year-on-year (8% after Type 31 reversal, 10% before), outperforming mid-single-digit target and driven by Nuclear, Marine and Aviation.
Read all positive updates
Company Guidance
Management reaffirmed its medium‑term guidance of mid‑single‑digit organic revenue growth, 9%+ operating margins and 80%+ operating cash conversion, noting FY2026 results that support this: organic revenue growth of 8%, operating margin up 70bps to 8.2% and operating profit £433m (up 19%), EPS +20%, free cash flow £262m with 84% cash conversion, dividend +15%, a completed £200m buyback and a further £200m to execute in FY2027, revenue cover at 1 April ~70%, and a strong BBB+ balance sheet; they also disclosed a revised £140m Type 31 charge (Type 31 revenue before reversal £190m booked at 0%) and said the cash impact will be absorbed within the medium‑term guidance.Babcock International Financial Statement Overview
Summary
Income Statement
64
Positive
Balance Sheet
52
Neutral
Cash Flow
70
Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.18B | 4.83B | 4.39B | 4.44B | 3.97B |
| Gross Profit | 305.10M | 4.83B | 247.20M | 833.60M | 270.40M |
| EBITDA | 473.20M | 498.50M | 381.40M | 249.30M | -1.44B |
| Net Income | 211.20M | 247.10M | 165.70M | -35.00M | -1.80B |
Balance Sheet | |||||
| Total Assets | 3.93B | 3.69B | 3.58B | 3.31B | 4.61B |
| Cash, Cash Equivalents and Short-Term Investments | 739.90M | 647.80M | 575.00M | 456.00M | 913.00M |
| Total Debt | 1.10B | 1.03B | 998.00M | 1.02B | 2.32B |
| Total Liabilities | 3.30B | 3.07B | 3.17B | 2.94B | 4.38B |
| Stockholders Equity | 614.00M | 604.40M | 388.90M | 353.90M | 213.00M |
Cash Flow | |||||
| Free Cash Flow | 263.20M | 180.50M | 172.30M | 144.90M | 287.70M |
| Operating Cash Flow | 413.50M | 308.80M | 314.70M | 270.00M | 464.20M |
| Investing Cash Flow | -102.80M | -110.80M | -100.60M | 74.80M | -61.20M |
| Financing Cash Flow | -239.50M | -92.70M | -85.50M | -666.10M | -1.22B |
Babcock International Technical Analysis
Negative
1255.50
Price Trends
1033.08
Negative
1162.35
Negative
1218.17
Negative
Market Momentum
-2.43
Negative
46.98
Neutral
69.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:BAB, the sentiment is Negative. The current price of 1255.5 is above the 20-day moving average (MA) of 1015.46, above the 50-day MA of 1033.08, and above the 200-day MA of 1218.17, indicating a bearish trend. The MACD of -2.43 indicates Negative momentum. The RSI at 46.98 is Neutral, neither overbought nor oversold. The STOCH value of 69.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:BAB.
Babcock International Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | £554.26M | 14.95 | 14.87% | 1.88% | -16.42% | 23.14% | |
74 Outperform | £4.03B | 15.92 | 23.73% | 1.80% | 15.24% | 54.30% | |
73 Outperform | £2.23B | 12.87 | 24.53% | 2.49% | 10.39% | 32.54% | |
72 Outperform | £531.26M | 14.68 | 30.23% | 3.65% | 0.53% | -8.91% | |
71 Outperform | £912.00M | 15.87 | 11.69% | 3.19% | 2.50% | 40.96% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | £4.96B | 23.77 | 43.22% | 0.56% | 7.17% | -14.18% |
* Industrials Sector Average
GB:BAB
Babcock International
1,009.50
-79.06
-7.26%
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65.54%
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209.00
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GB:GFRD
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538.00
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23.60%
GB:KIE
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216.00
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GB:MGNS
Morgan Sindall
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316.77
7.08%
Babcock International Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Babcock lifts dividend and buyback as defence and nuclear growth offsets Type 31 hit
Positive
Jun 22, 2026
Babcock International reported full-year revenue of £5.18 billion, up 8% organically, driven by strong performances in its Nuclear and Aviation businesses, and strong cash generation that cut net debt to £329 million while supporting a 1...
Business Operations and StrategyStock BuybackFinancial Disclosures
Babcock absorbs £140m Type 31 hit but holds FY27 guidance and launches new buyback
Positive
May 13, 2026
Babcock International reported strong underlying operational and financial performance for the year to 31 March 2026, led by double‑digit revenue growth and margin expansion in its Nuclear and Aviation divisions, and solid progress in Marine...
Regulatory Filings and Compliance
Babcock Corrects Share Capital Reference Date and Confirms Voting Rights
Neutral
May 1, 2026
Babcock International Group has corrected its latest share capital disclosure, clarifying that the reference date is 30 April 2026 rather than 31 March as previously stated. The company confirms it has 505,596,597 issued ordinary shares of 60 penc...
Regulatory Filings and Compliance
Babcock Updates Market on Total Voting Rights
Neutral
May 1, 2026
Babcock International has notified the market of its share capital and voting rights position as at 31 March 2026, in line with U.K. disclosure and transparency rules. The company reported an issued share capital of 505,596,597 ordinary shares, of...
Business Operations and StrategyStock Buyback
Babcock International Completes £200m Share Buyback Programme
Positive
Apr 29, 2026
Babcock International has completed the final tranche of its £200 million share buyback programme, repurchasing 282,900 ordinary shares at a volume-weighted average price of £10.94 on 28 April 2026 through Jefferies International. The sh...
Business Operations and StrategyStock Buyback
Babcock Adds to Buyback Programme With Further Treasury Share Purchase
Positive
Apr 28, 2026
Babcock International Group PLC has repurchased 260,000 of its 60 pence ordinary shares on 27 April 2026 via Jefferies International Limited, paying between £11.0850 and £11.4000 per share at a volume-weighted average price of £11.2...
Business Operations and StrategyStock Buyback
Babcock Continues Aggressive Buyback With £194m of Shares Repurchased Since 2025
Positive
Apr 27, 2026
Babcock International has continued its share buyback programme, repurchasing 676,082 ordinary shares on 24 April 2026 via J.P. Morgan Securities at an average price of 1,163.33 pence, with the shares to be held in treasury. The latest transaction...
Business Operations and StrategyStock Buyback
Babcock Adds to Buyback, Lifts Treasury Stock to Nearly 14 Million Shares
Positive
Apr 24, 2026
Babcock International Group PLC has continued its share buyback programme, repurchasing 238,000 ordinary shares on 23 April 2026 at prices between £11.625 and £11.94, with a volume-weighted average price of £11.8075. The company int...
Business Operations and StrategyStock Buyback
Babcock Expands Share Buyback, Lifts Treasury Stock to 13.7 Million Shares
Positive
Apr 23, 2026
Babcock International has continued its share buyback programme, repurchasing 1,142,914 ordinary shares on 22 April 2026 at an average price of 1,213.3855 pence per share through J.P. Morgan Securities. The company plans to hold these shares in tr...
Business Operations and StrategyStock Buyback
Babcock Deepens Capital Return Drive With Further £12.2 Share Buyback
Positive
Apr 22, 2026
Babcock International has continued its share buyback activity, repurchasing 238,000 ordinary shares on 21 April 2026 at a volume-weighted average price of £12.2039, with prices ranging between £12.0700 and £12.4950. The shares, acq...
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock with Ongoing £166m Share Buyback
Positive
Apr 20, 2026
Babcock International Group PLC has continued its share buyback activity, purchasing 819,446 ordinary shares on 17 April 2026 through Jefferies International at a volume-weighted average price of £12.4908, with prices ranging between £12...
Business Operations and StrategyStock Buyback
Babcock Continues Share Buyback, Adds 151,000 Shares to Treasury
Positive
Apr 16, 2026
Babcock International Group PLC has continued its share buyback programme, purchasing 151,308 ordinary shares on 15 April 2026 via Jefferies International at prices between £12.37 and £12.675, with a volume-weighted average of £12.5...
Business Operations and StrategyStock Buyback
Babcock Deepens Buyback with Additional Treasury Share Purchases
Positive
Apr 14, 2026
Babcock International Group PLC has continued its share buyback activity, purchasing 111,705 ordinary shares on 13 April 2026 through Jefferies International at prices ranging between £12.4600 and £12.7150 per share. The company will hol...
Business Operations and StrategyStock BuybackRegulatory Filings and Compliance
Babcock Continues Buyback, Clarifies Disclosure on Latest Share Purchases
Positive
Apr 10, 2026
Babcock International Group has continued its share buyback activity, purchasing 204,256 ordinary shares on 7 April 2026 through Jefferies International at prices ranging between £12.2450 and £12.7600, with a volume-weighted average pric...
Business Operations and StrategyStock Buyback
Babcock Adds to Share Buyback as Treasury Stock Rises
Positive
Apr 10, 2026
Babcock International Group PLC has repurchased 80,635 of its 60 pence ordinary shares on 9 April 2026 via Jefferies International, paying a volume-weighted average price of £12.7072 and intends to hold the shares in treasury. The latest buyb...
Business Operations and StrategyStock Buyback
Babcock Extends £152m Share Buyback, Boosting Treasury Stock Position
Positive
Apr 8, 2026
Babcock International Group PLC has continued its share buyback activity, repurchasing 204,256 ordinary shares on 7 April 2026 via Jefferies International at prices between £12.2450 and £12.7600, with a volume-weighted average of £1...
Business Operations and StrategyStock Buyback
Babcock Adds to Buyback With Further Treasury Share Purchases
Positive
Apr 2, 2026
Babcock International Group has continued its share buyback activity, purchasing 205,520 ordinary shares on 1 April 2026 through Jefferies International at a volume-weighted average price of £12.3928. The company intends to hold these shares ...
Regulatory Filings and Compliance
Babcock Updates Market on Total Voting Rights and Share Capital
Neutral
Apr 1, 2026
Babcock International has reported that, as of 31 March 2026, its issued share capital comprised 505,596,597 ordinary shares of 60 pence each, of which 10,740,335 are held in treasury and therefore do not carry voting rights. As a result, the comp...
Business Operations and StrategyStock Buyback
Babcock Tightens Equity Base With Ongoing Treasury Share Buyback
Positive
Apr 1, 2026
Babcock International has continued its share buyback programme, repurchasing 314,817 ordinary shares on 31 March 2026 via J.P. Morgan Securities at an average price of 1,158.1558 pence, with the shares to be held in treasury. Since July 2025 the ...
Business Operations and Strategy
Babcock Secures Bridging Deal with UK MOD Ahead of New Long-Term Submarine Support Contract
Positive
Apr 1, 2026
Babcock International has secured a six-month bridging agreement under its Future Maritime Support Programme with the UK Ministry of Defence to ensure continuity of naval base and nuclear submarine support services following the expiry of its five...
Business Operations and StrategyStock Buyback
Babcock Continues Share Buyback, Adds 357,670 Shares to Treasury
Positive
Mar 31, 2026
Babcock International Group has continued its share buyback programme, purchasing 357,670 ordinary shares on 30 March 2026 via Jefferies International at a volume-weighted average price of £11.5287. The company intends to hold these shares in...
Business Operations and StrategyStock Buyback
Babcock Expands Share Buyback, Lifts Treasury Holdings to Over 10 Million Shares
Positive
Mar 27, 2026
Babcock International Group PLC has continued its share buyback activity, purchasing 526,855 ordinary shares on 26 March 2026 at a volume-weighted average price of £12.2722, with prices ranging between £12.1400 and £12.4000. The com...
Business Operations and StrategyStock Buyback
Babcock Deepens Buyback With £132.7m of Shares Repurchased
Positive
Mar 26, 2026
Babcock International has continued its share buyback programme, repurchasing 1,059,401 ordinary shares on 25 March 2026 via J.P. Morgan Securities at an average price of about 1,265.91 pence, with the shares to be held in treasury. Since July 202...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.