Babcock International (BAB) AI Stock Analysis

• Market Cap: £5.27B
• Dividend Yield: 0.55%
• Average Volume (3M): 1.80M
• Price to Earnings (P/E): 21.3
• Beta (1Y): 1.08
• Revenue Growth: 10.08%
• EPS Growth: 49.21%
• Country: UK
• Employees: 28,343
• Sector: Industrials
• Sector Strength: 78
• Industry: Engineering & Construction
• EPS (TTM): 0.27
• Shares Outstanding: 504,462,770
• 10 Day Avg. Volume: 2,061,798
• 30 Day Avg. Volume: 1,799,263
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £1,244.75
• Price Target Upside: 28.46% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 65 Neutral
• Price Target: 1,070.00p ▲(10.42% Upside)

Babcock International's overall score is driven by a stable financial performance and a strategic share buyback program, which enhances shareholder value. However, technical indicators suggest potential bearish momentum, and the stock's high P/E ratio indicates it may be overvalued. The low dividend yield offers limited income potential.

Positive Factors

Cash Return

The group enters a period of stronger cash return, with approximately £0.7 billion of M&A or buyback firepower on top of the £200 million buyback program just announced.

Contract Extension

Babcock announced it has secured a 5-year extension of its British Army vehicle, fleet support and soldier training contract, worth £1.0bn in revenues to the group.

Valuation

Babcock continues to trade at a 25% discount to key peer BAE Systems.

Negative Factors

Market Conditions

The announcement comes whilst the UK Strategic Defense Review is still underway.

Babcock International Business Overview & Revenue Model

Company Description

Babcock International Group PLC, together with its subsidiaries, provides value-add services for aerospace, defense, and security in the United Kingdom, rest of Europe, Africa, North America, Australasia, and internationally. The company operates through four segments: Marine, Nuclear, Land, and Aviation. It designs, procures, operates, and manages critical utility and process equipment; offers asset management, defense and maritime training, information and intelligence, equipment and system, and facilities and infrastructure services, as well as naval platforms; and designs, manufactures, and provides through-life support for mechanical and electrical systems and equipment. The company also offers naval architecture, engineering, and project management services; submarines and complex engineering services in support of various decommissioning programs and projects, training and operation support, new build program management, and design and installation; critical vehicle fleet management, and equipment support and training services for military and civil customers; and designs, assesses, manufactures, installs, maintains, and decommissions vehicles for police, fire and ambulance, civil service, military, and other security-focused organizations. In addition, it provides plain line track renewal services; and engineering services for track projects, signaling, telecommunications, and on-track plants. Further, the company offers critical engineering services to defense and civil customers, including pilot training, equipment support, and airbase management, as well as operates aviation fleets that provide delivering emergency services. Babcock International Group PLC was founded in 1891 and is headquartered in London, the United Kingdom.

How the Company Makes Money

Babcock International generates revenue primarily through long-term contracts and service agreements with government and defense organizations, which form a significant portion of its business. The company's revenue model includes maintenance contracts, engineering services, and operational support, often structured as multi-year agreements that provide stable and recurring income. Key revenue streams include naval support services, defense technology and training, and civil engineering projects. Additionally, Babcock engages in partnerships with various governmental and commercial entities, leveraging these relationships to secure contracts and expand its service offerings. The company's focus on critical infrastructure and asset management also positions it to benefit from ongoing investments in defense and public sector projects.

Babcock International Financial Statement Overview

Summary

Babcock International shows a solid recovery in revenue and profitability with a high gross profit margin. However, the net profit margin is modest, and there is room for improvement in free cash flow management. The balance sheet indicates improved leverage but highlights the need for cautious debt management.

Income Statement

Babcock International shows a positive revenue growth rate of 4.53% in the latest year, indicating a recovery from previous declines. The gross profit margin is exceptionally high at 100%, suggesting effective cost management. However, the net profit margin is modest at 5.11%, and the EBIT and EBITDA margins are moderate at 7.88% and 10.32%, respectively. Overall, the income statement reflects a stable performance with room for improvement in profitability.

Balance Sheet

The company's debt-to-equity ratio has improved to 1.70 from previous higher levels, indicating a reduction in leverage. Return on equity is strong at 40.88%, showcasing effective use of equity to generate profits. However, the equity ratio is relatively low, suggesting potential risks if debt levels increase again. The balance sheet shows progress in financial stability but highlights the need for cautious debt management.

Cash Flow

Operating cash flow remains positive, though the free cash flow has decreased by 20.49% compared to the previous year. The operating cash flow to net income ratio is 0.17, indicating moderate cash generation relative to net income. The free cash flow to net income ratio is 0.58, reflecting a decent conversion of earnings into cash. The cash flow statement suggests adequate liquidity but highlights the need for improved free cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.83B	4.83B	4.39B	4.44B	4.10B	3.97B
Gross Profit	362.40M	4.83B	247.20M	833.60M	886.30M	270.40M
EBITDA	472.00M	498.50M	378.70M	249.30M	439.80M	-1.44B
Net Income	247.10M	247.10M	165.70M	-35.00M	164.20M	-1.80B
Balance Sheet
Total Assets	3.69B	3.69B	3.58B	3.31B	4.60B	4.61B
Cash, Cash Equivalents and Short-Term Investments	647.80M	647.80M	575.00M	456.00M	1.16B	913.00M
Total Debt	1.03B	1.03B	998.00M	1.02B	2.15B	2.32B
Total Liabilities	3.07B	3.07B	3.17B	2.94B	3.90B	4.38B
Stockholders Equity	604.40M	604.40M	388.90M	353.90M	682.00M	213.00M
Cash Flow
Free Cash Flow	203.90M	180.50M	172.30M	144.90M	-154.80M	287.70M
Operating Cash Flow	309.20M	308.80M	314.70M	270.00M	48.40M	464.20M
Investing Cash Flow	-123.00M	-110.80M	-100.60M	74.80M	297.00M	-61.20M
Financing Cash Flow	-92.70M	-92.70M	-85.50M	-666.10M	-122.70M	-1.22B

Babcock International Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 969.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 969 is below the 20-day moving average (MA) of 1002.20, below the 50-day MA of 1047.98, and above the 200-day MA of 754.12, indicating a neutral trend. The MACD of -15.69 indicates Negative momentum. The RSI at 42.83 is Neutral, neither overbought nor oversold. The STOCH value of 65.07 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BBY	79 Outperform	£2.81B	15.88	16.34%	2.20%	9.97%	-15.46%
MGNS	78 Outperform	£2.09B	13.70	24.19%	2.22%	6.93%	21.50%
GFRD	78 Outperform	£420.96M	10.63	35.97%	3.89%	22.39%	179.53%
KIE	73 Outperform	£878.07M	20.68	10.20%	2.64%	8.04%	6.94%
KLR	73 Outperform	£914.77M	6.72	24.69%	1.38%	-1.17%	12.31%
BAB	65 Neutral	£5.27B	21.34	49.75%	0.55%	10.08%	49.21%
Sector *	64 Neutral	$10.78B	16.39	5.87%	2.08%	2.65%	-16.28%

Babcock International Corporate Events

Babcock International Expands Share Buyback Program

Babcock International Group PLC has announced the purchase of 49,517 of its ordinary shares at an average price of 990.9835 pence per share, with the intention to hold these shares in treasury. This move is part of a broader buyback program that has seen the company acquire over 2.5 million shares since July 2025, reflecting a strategic effort to manage its capital structure and potentially enhance shareholder value.

Babcock International Expands Share Buyback Program

Babcock International Group PLC has announced the purchase of 134,929 of its own ordinary shares at a volume-weighted average price of 9.9105 pence per share. This transaction is part of a broader share buyback program, with the company having acquired over 2.48 million shares since July 2025. The purchased shares will be held in treasury, reflecting Babcock’s strategy to manage its capital structure and potentially enhance shareholder value.

Babcock International Enhances Shareholder Value with Strategic Share Buyback

Babcock International Group PLC has announced the repurchase of 50,767 of its ordinary shares through J.P. Morgan Securities plc, as part of its ongoing share buyback program. The shares were acquired at an average price of 971.1297 pence per share and will be held in treasury. This transaction is part of a larger effort since July 2025, where the company has invested over £24 million to repurchase 2,352,328 shares. This strategic move is likely aimed at enhancing shareholder value and optimizing capital structure, reflecting the company’s confidence in its financial health and future prospects.

Babcock International Enhances Shareholder Value with Strategic Buyback

Babcock International Group PLC has repurchased 153,754 of its ordinary shares at an average price of 9.6539 pence per share through Jefferies International Limited. This transaction is part of a broader buyback strategy, having acquired over 2.3 million shares since late July 2025. The repurchased shares will be held in treasury, which could potentially enhance shareholder value by reducing the number of shares in circulation.

Babcock International Executes Share Buyback Program

Babcock International Group PLC has announced the repurchase of 52,720 of its ordinary shares, with the transaction executed through J.P. Morgan Securities plc. The shares were bought at an average price of 948.3794 pence and will be held in treasury. This buyback is part of a broader program that has seen the company repurchase over 2 million shares since July 2025, reflecting a strategic move to manage its capital structure and potentially enhance shareholder value.

Babcock International Executes Share Buyback to Strengthen Capital Structure

Babcock International Group PLC announced the repurchase of 169,975 of its ordinary shares at an average price of 9.5179 pence per share, as part of its ongoing share buyback program. The company intends to hold these shares in treasury, reflecting a strategic move to manage its capital structure and potentially enhance shareholder value.

Babcock International Enhances Shareholder Value with Strategic Buyback

Babcock International Group PLC has announced the purchase of 51,836 of its own ordinary shares through J.P. Morgan Securities plc, with the shares intended to be held in treasury. This transaction is part of a buyback program that has seen the company acquire 1,925,112 shares since July 24, 2025, at a total cost of £19,931,989.69. The move is likely aimed at consolidating the company’s share value and optimizing capital structure, which could have positive implications for shareholders by potentially increasing the value of remaining shares.

Babcock Executives Exercise Share Awards, Reflecting Strategic Financial Moves

Babcock International Group PLC has disclosed transactions involving key executives, including John Howie and Neal Misell, who exercised share awards and sold portions to cover tax and costs, retaining the remaining shares. These transactions, conducted in London, reflect strategic financial management by the company’s leadership, potentially impacting shareholder value and market perception.

Babcock International Continues Share Buyback Program

Babcock International Group PLC has repurchased 133,691 of its ordinary shares at an average price of 10.0448 pence per share, with the highest price being 10.1600 pence and the lowest 9.9750 pence. This transaction is part of a broader share buyback initiative, with the company having acquired a total of 1,873,276 shares since July 24, 2025, at a cost of £19,431,994.40. The repurchased shares are intended to be held in treasury, which may impact the company’s share capital structure and potentially enhance shareholder value by reducing the number of shares in circulation.

Babcock Executives Execute Share Transactions

Babcock International announced transactions involving its top executives, including CEO David Lockwood and CFO David Mellors, who exercised share awards and sold portions to cover tax and costs, retaining the remaining shares. These transactions, conducted on August 4, 2025, in London, reflect strategic financial management by the company’s leadership, potentially impacting shareholder perceptions and market confidence.

Babcock International Advances Share Buyback Program

Babcock International Group PLC announced the purchase of 48,498 of its ordinary shares, priced between 1,001 and 1,018 pence each, as part of its ongoing share buyback program. This transaction reflects the company’s strategy to manage its capital structure effectively, potentially enhancing shareholder value and signaling confidence in its financial health.

Babcock International Enhances Shareholder Value with Treasury Stock Purchase

Babcock International Group PLC has announced the purchase of 129,720 of its own ordinary shares at an average price of 10.1152 pence per share, which will be held in treasury. This transaction is part of a broader share repurchase initiative, with the company having acquired 1,691,087 shares since July 24, 2025, at a total cost of £17,600,585.22. This move is likely aimed at consolidating ownership and potentially enhancing shareholder value by reducing the number of shares in circulation.

Babcock International Continues Share Buyback Program

Babcock International Group PLC announced the repurchase of 49,476 of its ordinary shares at an average price of 1,009.4773 pence per share, as part of its ongoing share buyback program. This transaction reflects the company’s strategy to manage its capital structure effectively, potentially enhancing shareholder value by reducing the number of shares in circulation.

Babcock International Announces Total Voting Rights Update

Babcock International Group PLC has announced its total voting rights as of the end of July 2025, with a share capital consisting of 505,596,597 ordinary shares, of which 811,891 are held in treasury. This update is crucial for shareholders to determine their notification obligations under the Financial Conduct Authority’s rules, impacting how they manage their interests in the company.

Babcock CEO Transfers Shares to Spouse

Babcock International Group PLC announced a managerial transaction involving the transfer of ordinary shares by Neal Misell, the Chief Executive Officer of Mission Systems, to his spouse, Amanda Misell, for nil consideration. This transaction, conducted outside a trading venue, reflects internal shareholding adjustments and does not directly impact the company’s market operations or stakeholder interests.

Babcock International Executes Share Buyback Strategy

Babcock International Group PLC announced the purchase of 130,542 of its own ordinary shares at an average price of 10.1276 pence per share, which will be held in treasury. This transaction is part of a broader share buyback strategy, having acquired a total of 1,397,495 shares since July 24, 2025, at a cost of £14,602,271.26. The move is likely aimed at optimizing the company’s capital structure and potentially enhancing shareholder value.

Babcock International Announces AGM Details and Annual Report Release

Babcock International Group PLC has announced the availability of the Notice of its Annual General Meeting, scheduled for 25 September 2025. The notice, along with the company’s Annual Report and Financial Statements for the year ended 31 March 2025, is accessible to shareholders and has been submitted to the Financial Conduct Authority. This announcement ensures transparency and compliance with regulatory requirements, reinforcing Babcock’s commitment to stakeholder engagement and corporate governance.

Babcock International Enhances Shareholder Value with Share Buyback

Babcock International Group PLC has announced the repurchase of 175,573 of its ordinary shares at prices ranging from 1,005 to 1,037 pence per share, with an average price of 1,011.1135 pence. The company plans to hold these shares in treasury, and since July 24, 2025, it has repurchased a total of 1,266,953 shares at a cost of £13,346,600. This move is part of the company’s ongoing buyback program, which aims to optimize its capital structure and potentially enhance shareholder value.

Babcock International Executes Share Buyback Strategy

Babcock International Group PLC announced the repurchase of 378,213 of its ordinary shares at an average price of 10.4359 pence per share, with the intention to hold these shares in treasury. This transaction is part of a broader strategy to manage the company’s capital structure and potentially enhance shareholder value.

Babcock International Executes Share Buyback to Enhance Shareholder Value

Babcock International Group PLC has executed a share buyback program, purchasing 713,167 of its ordinary shares through J.P. Morgan Securities plc. The shares, bought at an average price of 1,059.7741 pence, will be held in treasury, reducing the number of shares in circulation and potentially increasing shareholder value. This move reflects Babcock’s strategic financial management aimed at optimizing its capital structure and enhancing shareholder returns.

Babcock International Initiates £200 Million Share Buyback Program

Babcock International Group PLC has announced the launch of a £200 million share buyback program aimed at reducing the company’s share capital and fulfilling obligations under its employee share schemes. The program, managed by Jefferies International Limited and J.P. Morgan Securities plc, will be conducted independently and is expected to conclude by March 2026, with shares purchased on the London Stock Exchange or other venues. This strategic move is anticipated to strengthen Babcock’s market position and provide value to its stakeholders by optimizing capital structure.

Babcock International Reports Robust FY25 Results and Strategic Growth Initiatives

Babcock International has reported strong financial results for FY25, with revenue growing by 11% to £4.8 billion and an increase in operating profit by 17%. The company has announced a 30% increase in its full-year dividend and a £200 million share buyback program, reflecting its confidence in future growth. Babcock continues to expand its capabilities in nuclear and defense sectors, securing significant contracts such as the five-year ‘Reframe’ extension for the British Army and progressing on key projects like the Type 31 frigate program and Hinkley Point C nuclear power plant. The strategic focus on operational efficiency and global market opportunities positions Babcock well to capitalize on increasing defense spending and energy security needs.

Babcock International Awards Shares to Key Executives Under Deferred Bonus Plan

Babcock International Group PLC announced the award of shares under its Deferred Share Bonus 2022 Plan to several key executives, including the CEO and CFO. This move is part of the company’s strategy to align management incentives with shareholder interests and ensure long-term commitment from its leadership team. The awards, which were executed at no cost to the executives, reflect Babcock’s ongoing efforts to strengthen its leadership structure and enhance its competitive position in the market.

Babcock International’s Chief People Officer Executes Share Transaction

Babcock International announced a transaction involving its Chief People Officer, Louise Atkinson, who exercised a nil cost share award and subsequently sold 9,016 ordinary shares at a price of GBP 10.691 per share. This transaction, conducted in London, reflects internal financial activities within the company and may have implications for shareholder perceptions and market confidence.

Babcock International Confirms FY25 Financial Results

Babcock International Group PLC has confirmed its financial results for the fiscal year ending March 31, 2025, following an audit that resulted in an unqualified opinion. The audited results align with the unaudited preliminary results released earlier, indicating stability and transparency in the company’s financial reporting. This confirmation may reinforce stakeholder confidence in Babcock’s financial health and operational integrity.

Babcock International Reports Strong FY25 Results and Strategic Advancements

Babcock International has reported strong financial results for the fiscal year ending March 2025, with significant growth in revenue and operating profit driven by its nuclear and marine sectors. The company has upgraded its medium-term guidance, increased dividends, and announced a £200 million share buyback program, reflecting its robust operational momentum and strategic positioning in the defense market. Key achievements include major contract awards and strategic initiatives such as joint ventures and training programs, underscoring Babcock’s commitment to expanding its capabilities and market presence.

Babcock International Sees Shift in Shareholder Structure

Babcock International Group PLC has announced a significant change in its shareholder structure, as The Capital Group Companies, Inc. has crossed a voting rights threshold with a 5.513128% stake. This development highlights the influence of major investment management firms in Babcock’s shareholder base, potentially impacting the company’s strategic decisions and market perception.

Babcock International Announces New Board Appointment at Vertical Aerospace

Babcock International Group PLC announced that Lord Parker has been appointed to the Board of Directors of Vertical Aerospace, effective June 2, 2025. This appointment may strengthen Vertical Aerospace’s strategic direction and governance, potentially impacting its market positioning and stakeholder relations.

Babcock International Announces Retirement of Non-Executive Director Lucy Dimes

Babcock International Group PLC announced the retirement of Lucy Dimes, a Non-Executive Director, who will not seek re-election at the upcoming Annual General Meeting in September 2025. Lucy Dimes has been instrumental in the company’s turnaround and success since her appointment in April 2018, and her departure marks a significant change in the board’s composition, potentially impacting the company’s strategic direction.

Babcock International Highlights Growth Prospects of Cavendish Nuclear

Babcock International is hosting a teach-in for analysts and investors to highlight the capabilities and growth prospects of its Cavendish Nuclear business, which currently contributes 7% to the Group’s revenue. The business is expected to grow significantly, with revenues projected to reach approximately £600 million by 2030, driven by a robust pipeline of opportunities in the nuclear sector.