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Babcock International
(LSE:BAB)
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Rating:61Neutral
Price Target:
1,256.00 p
▲(12.04% Upside)
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
Cash generation
Sustained improvement in operating and free cash flow, plus very high cash conversion, increases capacity to pay down debt, fund capex and buybacks, and absorb program charges. This strengthens durable financial flexibility and supports reinvestment into long‑term contracts and capabilities.
Negative Factors
Elevated leverage
Material leverage constrains financial flexibility: higher interest and refinancing sensitivity raise the stakes for execution and cash flow delivery. A leveraged balance sheet increases downside risk from contract delays, bid slippage or market funding stress over the next 2–6 months.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Sustained improvement in operating and free cash flow, plus very high cash conversion, increases capacity to pay down debt, fund capex and buybacks, and absorb program charges. This strengthens durable financial flexibility and supports reinvestment into long‑term contracts and capabilities.
Read all positive factors
Babcock International (BAB) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£5.84B
Dividend Yield0.59%
Average Volume (3M)2.10M
Price to Earnings (P/E)28.0
Beta (1Y)1.38
Revenue Growth7.17%
EPS Growth-14.18%
CountryUK
Employees30,481
SectorIndustrials
Sector Strength72
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.42
Shares Outstanding492,815,460
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
£1,386.67Price Target Upside23.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
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 Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | £568.82M | 15.45 | 14.87% | 1.94% | -16.42% | 23.14% | |
72 Outperform | £611.52M | 16.97 | 30.23% | 3.21% | 0.53% | -8.91% | |
71 Outperform | £1.05B | 18.34 | 11.69% | 3.26% | 2.50% | 40.96% | |
70 Outperform | £4.16B | 16.23 | 23.73% | 1.59% | 15.24% | 54.30% | |
68 Neutral | £2.12B | 11.07 | 24.83% | 2.36% | 10.84% | 24.56% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | £5.84B | 28.03 | 31.57% | 0.62% | 7.17% | -14.18% |
* Industrials Sector Average
GB:BAB
Babcock International
1,190.50
238.02
24.99%
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Babcock International Corporate Events
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock as Share Buyback Nears £10m Since July
Positive
Aug 10, 2026
Babcock International has continued its share buyback programme, repurchasing 12,596 ordinary shares on 7 August 2026 via J.P. Morgan Securities at an average price of £11.9104, with the shares to be held in treasury. Since 1 July 2026, the g...
Business Operations and StrategyStock Buyback
Babcock Expands Treasury Stock with Ongoing Share Buyback Programme
Positive
Aug 10, 2026
Babcock International has continued its share buyback programme, purchasing 12,596 ordinary shares on 7 August 2026 via J.P. Morgan Securities at an average price of £11.9104 per share. The company plans to hold these shares in treasury, refl...
Stock Buyback
Babcock Adds to Treasury Stock with Ongoing Share Buyback
Positive
Aug 6, 2026
Babcock International has continued its share buyback programme, purchasing 12,471 ordinary shares on 5 August 2026 at an average price of £12.0306 per share through J.P. Morgan Securities and intending to hold them in treasury. Since 1 July ...
Other
Babcock Executives Exercise Incentive Share Awards and Sell Portions to Cover Costs
Neutral
Aug 5, 2026
Babcock International has reported a series of share transactions by senior executives, including its Chief Financial Officer, divisional chief executives and other members of top management. The transactions, conducted in London on 3 August 2026,...
Business Operations and StrategyStock Buyback
Babcock Expands Treasury Stock with Ongoing Share Buyback
Positive
Aug 4, 2026
Babcock International Group PLC has continued its share buyback programme, repurchasing 13,137 ordinary shares on 3 August 2026 via J.P. Morgan Securities at an average price of £11.42 per share. The latest purchases will be held in treasury,...
Business Operations and StrategyStock Buyback
Babcock International Expands Treasury Stock With Ongoing Share Buybacks
Positive
Jul 31, 2026
Babcock International has continued its share buyback programme, repurchasing 13,329 ordinary shares on 30 July 2026 through J.P. Morgan Securities at an average price of £11.254 per share, with the shares to be held in treasury. This latest ...
Business Operations and StrategyStock Buyback
Babcock International Continues Treasury Share Buybacks to Fine-Tune Capital Structure
Positive
Jul 29, 2026
Babcock International Group PLC has continued its share buyback programme, purchasing 13,004 ordinary shares on 28 July 2026 through J.P. Morgan Securities at an average price of £11.5356 per share, with the shares to be held in treasury. Sin...
Business Operations and StrategyStock Buyback
Babcock boosts treasury stock with latest share buyback
Positive
Jul 27, 2026
Babcock International has continued its share buyback programme, repurchasing 13,303 ordinary shares on 24 July 2026 via J.P. Morgan Securities at an average price of £11.2788 per share. The shares will be held in treasury, indicating the com...
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock with Ongoing Share Buyback
Positive
Jul 23, 2026
Babcock International has continued its share buyback programme, repurchasing 13,548 ordinary shares on 22 July 2026 via J.P. Morgan Securities at an average price of £11.07 per share, with the intention of holding these shares in treasury. S...
Business Operations and StrategyStock Buyback
Babcock International Expands Treasury Stock With Ongoing Share Buybacks
Positive
Jul 21, 2026
Babcock International has continued its share buyback programme, repurchasing 14,441 ordinary shares on 20 July 2026 via J.P. Morgan Securities at an average price of £10.38 per share, with all shares to be held in treasury. Since 1 July, the...
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock as July Share Buyback Continues
Positive
Jul 20, 2026
Babcock International Group PLC has continued its share buyback activity, purchasing 3,327 ordinary shares on 17 July 2026 through Jefferies International at a volume-weighted average price of £10.3666, with the shares to be held in treasury....
Business Operations and StrategyStock Buyback
Babcock Expands Treasury Stock With Ongoing Share Buyback Programme
Positive
Jul 17, 2026
Babcock International Group PLC has continued its share buyback activity, repurchasing 14,665 ordinary shares on 16 July 2026 through J.P. Morgan Securities at an average price of £10.2052. The company plans to hold these shares in treasury, ...
Business Operations and StrategyStock Buyback
Babcock boosts treasury stock with continued share buybacks
Positive
Jul 16, 2026
Babcock International Group has continued its share buyback activity, purchasing 23,852 ordinary shares on 15 July 2026 at prices ranging between £9.9480 and £10.2850, with a volume-weighted average price of £10.1332. The company pl...
Business Operations and StrategyStock Buyback
Babcock Expands Treasury Stock with Ongoing Share Buyback
Positive
Jul 15, 2026
Babcock International has continued its share buyback programme, purchasing 161,880 ordinary shares on 14 July 2026 at an average price of £10.0431 per share via J.P. Morgan Securities. The company intends to hold these shares in treasury, fu...
Financial DisclosuresRegulatory Filings and ComplianceShareholder Meetings
Babcock Publishes AGM Notice and 2026 Annual Report for Shareholders
Neutral
Jul 14, 2026
Babcock International Group PLC has published its Notice of Annual General Meeting, confirming that the meeting will take place in London on 16 September 2026 at 10:30 a.m. The notice has been distributed to shareholders and submitted to the Finan...
Business Operations and StrategyPrivate Placements and Financing
Babcock Raises £250m with New 2031 Bond on LSE
Positive
Jul 14, 2026
Babcock International Group PLC has raised £250 million through the admission to trading of 5.125 per cent notes due 2031 on the London Stock Exchange’s main market. The issue forms part of the company’s £3 billion Euro Mediu...
Business Operations and StrategyStock Buyback
Babcock Expands Treasury Stock with Ongoing Share Buybacks
Positive
Jul 14, 2026
Babcock International has continued its share buyback activity, repurchasing 67,455 ordinary shares on 13 July 2026 at prices between £9.942 and £10.160 per share, with a volume-weighted average of £10.0377. The company plans to hol...
Business Operations and StrategyStock Buyback
Babcock International Continues Treasury Share Buyback Programme
Positive
Jul 13, 2026
Babcock International has continued its share buyback programme, purchasing 317,257 ordinary shares on 10 July 2026 via J.P. Morgan Securities at an average price of £10.1543 per share, with the shares to be held in treasury. Since the start ...
Business Operations and StrategyPrivate Placements and FinancingRegulatory Filings and Compliance
Babcock Issues £250m Bond to Refinance Maturing Debt and Fund Growth
Positive
Jul 10, 2026
Babcock International Group PLC has launched a £250 million five-year bond with a fixed 5.125% coupon, its first bond issue in seven years, to help refinance a £300 million bond maturing in October 2026. Strong investor demand, underpinn...
Business Operations and StrategyStock Buyback
Babcock Boosts Treasury Stock With July Share Buybacks
Positive
Jul 10, 2026
Babcock International Group PLC has continued its share repurchase activity, buying 37,978 ordinary shares on 9 July 2026 via Jefferies International at a volume-weighted average price of £10.2759, with the shares to be held in treasury. This...
Other
Babcock executives exercise nil-cost share awards and sell portions of holdings
Neutral
Jul 9, 2026
Babcock International has disclosed a series of share transactions involving senior executives, including the Group Company Secretary General Counsel, the Chief Transformation Officer, and the CEOs of its Nuclear and Aviation divisions. On 8 July...
Business Operations and StrategyStock Buyback
Babcock boosts treasury stock with latest share buyback
Positive
Jul 9, 2026
Babcock International has continued its share buyback activity, purchasing 14,427 ordinary shares on 8 July 2026 via J.P. Morgan Securities at an average price of £10.3978 per share. The company intends to hold these shares in treasury, refle...
Business Operations and StrategyExecutive/Board Changes
Babcock International boosts executive equity with new share awards
Positive
Jul 8, 2026
Babcock International has granted nil-cost awards of ordinary shares to several senior executives under its Performance Share Plan and the Deferred Share Bonus 2022 Plan. Deputy CEO Harry Holt received awards under both schemes, while the CFO and ...
Regulatory Filings and Compliance
Babcock Deputy CEO Executes Share Awards and Sells Portion of Holding
Neutral
Jul 8, 2026
Babcock International has disclosed a share transaction by Deputy Chief Executive Officer Harry Holt, who exercised nil-cost share awards under deferred share bonus plans and subsequently sold a portion of the resulting ordinary shares. The transa...
Executive/Board ChangesRegulatory Filings and Compliance
Babcock Executive Exercises Share Awards, Retains Increased Stake
Neutral
Jul 8, 2026
Babcock International has disclosed that Nick Hine, Chief Executive for Growth and Marine, exercised nil-cost share awards over 24,345 ordinary shares and sold 11,481 shares to cover tax and dealing costs, retaining a balance of 12,864 shares. The...
Business Operations and StrategyStock Buyback
Babcock International Expands Treasury Through Ongoing Share Buyback
Positive
Jul 7, 2026
Babcock International has continued its share buyback programme, purchasing 14,344 ordinary shares on 6 July 2026 through J.P. Morgan Securities at an average price of £10.443 per share, with the shares to be held in treasury. Since 1 July 20...
Business Operations and StrategyExecutive/Board Changes
Babcock Confirms Harry Holt as CEO as David Lockwood Retires
Positive
Jul 3, 2026
Babcock International has confirmed the appointment of Harry Holt as Director and Chief Executive Officer, effective 31 July 2026, marking the planned leadership transition at the defence services group. Holt’s succession follows the previou...
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock as Share Buyback Programme Continues
Positive
Jul 3, 2026
Babcock International Group PLC has continued its share buyback programme, purchasing 14,801 ordinary shares on 2 July 2026 via J.P. Morgan Securities at an average price of £10.4029 per share. The company intends to hold these shares in trea...
Business Operations and StrategyStock Buyback
Babcock Adds to Treasury Stock with £1.88 Million Share Buyback
Positive
Jul 2, 2026
Babcock International Group PLC has executed a further share repurchase, buying 188,395 ordinary shares at prices between £9.69 and £10.045 on 1 July 2026 through Jefferies International Limited. The shares, acquired at a volume-weighted...
Business Operations and StrategyStock Buyback
Babcock launches £200m share buyback to cut capital and fund employee schemes
Positive
Jun 30, 2026
Babcock International Group has launched a £200 million share buyback programme for its ordinary shares, effective immediately, with Jefferies International and J.P. Morgan Securities appointed to execute the non-discretionary purchases. The ...
Financial DisclosuresRegulatory Filings and ComplianceShareholder Meetings
Babcock International Files 2026 Annual Report and Sets AGM Date
Neutral
Jun 29, 2026
Babcock International has published its Annual Report and Financial Statements for the year ended 31 March 2026, making the documents available to shareholders via its website and through the UK Financial Conduct Authority’s National Storage...
Executive/Board ChangesRegulatory Filings and Compliance
Babcock Executive Exercises Share Awards and Sells Portion for Tax
Neutral
Jun 29, 2026
Babcock International disclosed that its Chief Transformation Officer, Donna Sinnick, has exercised nil-cost share awards over 32,193 ordinary shares and sold 15,180 of those shares on the London market to cover tax and dealing obligations. The re...
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...
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.