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Costain Group PLC (GB:COST)
LSE:COST

Costain (COST) AI Stock Analysis

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GB

Costain

(LSE:COST)

Rating:77Outperform
Price Target:
139.00p
▲( 11.74% Upside)
Costain's overall stock score is bolstered by a robust financial structure and strategic corporate developments. While the company demonstrates strong potential with recent contract wins and a solid balance sheet, caution is advised due to modest profit margins and declining cash flow efficiency. Technical indicators and valuation suggest the stock is reasonably priced, but high RSI warrants attention.

Costain (COST) vs. iShares MSCI United Kingdom ETF (EWC)

Costain Business Overview & Revenue Model

Company DescriptionCostain Group PLC is a leading British construction and engineering company that operates in the infrastructure sector, offering a range of services including consultancy, project management, and delivery for key infrastructure projects. The company focuses on sectors such as transportation, water, energy, and defense, providing integrated solutions to enhance the performance and resilience of critical national infrastructure.
How the Company Makes MoneyCostain makes money primarily through contracts for designing, managing, and delivering large-scale infrastructure projects. Its revenue streams are largely derived from public sector projects and partnerships with government entities to improve transportation networks, water systems, and energy infrastructure. The company engages in long-term contracts, often involving complex projects that require Costain's expertise in engineering and project management. Additionally, Costain benefits from strategic partnerships and alliances that enhance its capabilities and expand its market reach, contributing to its earnings.

Costain Financial Statement Overview

Summary
Costain demonstrates a stable financial outlook with improved profitability and a strong balance sheet. The company has managed low leverage while achieving a healthy ROE. Despite these positives, margins remain modest, and cash flow has declined, signaling areas for future enhancement.
Income Statement
75
Positive
Costain has shown a positive trajectory in its income statement metrics over the recent years. The Gross Profit Margin for 2024 is approximately 8.26%, while the Net Profit Margin sits at 2.44%. The company has managed a slight revenue growth from 2023 to 2024, indicating stability. Notably, the EBIT Margin is 2.49%, and the EBITDA Margin is 3.71%, reflecting operational efficiency improvements. However, the margins are relatively low compared to industry standards, suggesting room for further profitability enhancements.
Balance Sheet
80
Positive
The balance sheet reveals a strong equity position with an Equity Ratio of 43.06% in 2024, supported by a manageable Debt-to-Equity Ratio of 0.11. These metrics indicate a solid capital structure with low leverage, which reduces financial risk. Return on Equity (ROE) is healthy at 12.98%, showcasing effective use of shareholders' equity to generate profits. The company's financial stability is robust, providing a strong foundation for future growth.
Cash Flow
70
Positive
Cash flow analysis shows a decline in Free Cash Flow from 2023 to 2024, with a significant Free Cash Flow of £37.2M in 2024. The Operating Cash Flow to Net Income Ratio is 1.4, indicating solid cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio is 1.22, reflecting a decrease in cash flow efficiency compared to previous years. The company needs to focus on improving its free cash flow generation to sustain strong liquidity.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.25B1.33B1.42B1.14B978.40M
Gross Profit
103.30M103.50M82.20M39.10M-59.10M
EBIT
31.10M34.80M46.30M-9.50M-81.10M
EBITDA
52.60M50.90M47.20M4.60M-65.10M
Net Income Common Stockholders
30.60M22.10M25.90M-5.80M-78.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
158.50M164.40M123.80M159.40M150.90M
Total Assets
547.20M468.60M482.20M532.40M489.90M
Total Debt
25.80M24.30M24.10M66.20M80.10M
Net Debt
-132.70M-140.10M-99.70M-93.20M-70.80M
Total Liabilities
311.50M249.20M271.00M333.40M333.40M
Stockholders Equity
235.70M219.40M211.20M199.00M156.50M
Cash FlowFree Cash Flow
37.20M55.60M13.60M27.30M-50.90M
Operating Cash Flow
42.70M55.70M14.10M29.50M-46.80M
Investing Cash Flow
-9.00M-100.00K-1.30M-2.20M4.50M
Financing Cash Flow
-25.60M-15.00M-48.40M-18.80M12.90M

Costain Technical Analysis

Technical Analysis Sentiment
Positive
Last Price124.40
Price Trends
50DMA
108.36
Positive
100DMA
104.02
Positive
200DMA
102.07
Positive
Market Momentum
MACD
5.05
Negative
RSI
72.24
Negative
STOCH
90.48
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:COST, the sentiment is Positive. The current price of 124.4 is above the 20-day moving average (MA) of 116.50, above the 50-day MA of 108.36, and above the 200-day MA of 102.07, indicating a bullish trend. The MACD of 5.05 indicates Negative momentum. The RSI at 72.24 is Negative, neither overbought nor oversold. The STOCH value of 90.48 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:COST.

Costain Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
£668.87M14.7822.62%2.23%3.23%2.00%
77
Outperform
£335.26M10.9013.45%1.92%-6.07%41.18%
77
Outperform
£408.37M10.3835.97%4.07%22.39%179.53%
77
Outperform
£1.76B13.3421.67%3.50%10.41%11.04%
GBKIE
75
Outperform
£705.82M16.5410.20%3.33%8.04%6.94%
GBBBY
74
Outperform
£2.49B14.6015.35%2.37%3.02%-3.23%
64
Neutral
$4.46B11.945.17%249.36%4.00%-12.35%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:COST
Costain
124.40
42.90
52.64%
GB:KIE
Kier Group plc
164.20
22.55
15.92%
GB:BBY
Balfour Beatty
502.00
143.18
39.90%
GB:RNWH
Renew Holdings plc
839.00
-184.52
-18.03%
GB:GFRD
Galliford Try
419.00
158.97
61.14%
GB:MGNS
Morgan Sindall
3,785.00
1,397.33
58.52%

Costain Corporate Events

Business Operations and Strategy
Ennismore Adjusts Stake in Costain Group PLC
Neutral
May 19, 2025

Ennismore Fund Management Limited has adjusted its holdings in Costain Group PLC, reducing its voting rights from 6.56% to 5.82%. This change, notified on May 19, 2025, reflects a strategic shift in Ennismore’s investment approach, potentially impacting Costain’s shareholder dynamics and market perception.

The most recent analyst rating on (GB:COST) stock is a Hold with a £1.05 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
UBS Acquires Significant Stake in Costain Group
Neutral
May 19, 2025

Costain Group PLC has announced a change in its voting rights structure following an acquisition by UBS Group AG, which now holds a 6.541474% stake in the company. This development may influence Costain’s strategic decisions and could have implications for its market positioning and stakeholder interests.

The most recent analyst rating on (GB:COST) stock is a Hold with a £1.05 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Costain Group PLC’s 2025 AGM Resolutions Passed Successfully
Positive
May 15, 2025

Costain Group PLC announced the successful passing of all resolutions at its 2025 Annual General Meeting. The resolutions, which included ordinary and special resolutions, were approved by the necessary majorities, reflecting strong shareholder support. This outcome underscores the company’s stable governance and strategic direction, potentially reinforcing stakeholder confidence and enhancing its market position.

The most recent analyst rating on (GB:COST) stock is a Hold with a £1.05 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Costain’s Strong Trading Performance and Strategic Wins in Nuclear Energy
Positive
May 15, 2025

Costain Group PLC announced that its trading performance for the year is in line with expectations, with a strong forward work position and new contract wins, particularly in the nuclear energy sector. These contracts include significant projects with Urenco and Sizewell C, positioning Costain as a key player in the UK’s decarbonized energy initiatives. The company remains confident in its strategic growth prospects despite macroeconomic challenges.

The most recent analyst rating on (GB:COST) stock is a Hold with a £105.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Other
Costain Group PLC Shareholder Voting Rights Update
Neutral
May 7, 2025

Costain Group PLC has announced a change in the voting rights held by Perpetual Limited, a shareholder based in Sydney, Australia. The notification indicates that Perpetual Limited’s voting rights in Costain have decreased from 9.910% to 4.919%, which may influence the company’s shareholder dynamics and potentially affect its decision-making processes.

Private Placements and FinancingRegulatory Filings and Compliance
Costain Group PLC Increases Share Capital to Satisfy Employee Options
Neutral
May 1, 2025

Costain Group PLC announced an increase in its issued share capital to 272,566,087 ordinary shares as of April 30, 2025. This increase results from the allotment of shares to fulfill employee options under the Long Term Incentive Plan, impacting shareholder voting rights and interest calculations under FCA rules.

Shareholder MeetingsDividends
Costain Group Announces Scrip Dividend Reference Price for 2024
Neutral
Apr 28, 2025

Costain Group PLC has announced the Scrip Dividend Reference Price for its shareholders who opt for the scrip dividend alternative for the final dividend of the year ending December 31, 2024. The price is set at 104.88 pence per ordinary share, calculated based on the average market value from the London Stock Exchange. This move allows shareholders to receive dividends in the form of additional shares rather than cash, potentially impacting the company’s cash flow and shareholder equity. The final dividend, subject to approval at the upcoming Annual General Meeting, will be paid on May 29, 2025.

Other
UBS Reduces Holdings in Costain Group Below Reporting Threshold
Neutral
Apr 25, 2025

UBS Group AG’s trading book holdings in Costain Group PLC have fallen below the 5% threshold, making them exempt from reporting obligations. This change in holdings may impact Costain’s shareholder structure and could influence market perceptions of the company’s stock, although the immediate operational impact on Costain is not specified.

M&A Transactions
UBS Acquires Major Stake in Costain Group
Neutral
Apr 22, 2025

UBS Group AG, through its Investment Bank & Global Wealth Management division, has acquired a significant voting rights stake in Costain Group PLC, reaching a threshold of 5.221284% as of April 17, 2025. This acquisition marks a notable change in the shareholder structure of Costain, potentially impacting its governance and strategic decisions, as UBS now holds a substantial influence in the company.

Executive/Board ChangesBusiness Operations and Strategy
Costain Group Grants Share Awards to CEO and CFO
Positive
Apr 9, 2025

Costain Group PLC has announced the grant of share awards to its CEO, Alex Vaughan, and CFO, Helen Willis, under its 2023 Share Deferral Plan and Long Term Incentive Plan. These awards, which involve options over ordinary shares at a nil exercise price, are part of the company’s strategy to align executive incentives with long-term performance goals. The Share Deferral Plan awards will become exercisable two years from the grant date, while the Long Term Incentive Plan awards will vest after three years, contingent on meeting performance conditions. This move underscores Costain’s commitment to retaining key leadership and enhancing shareholder value.

Shareholder MeetingsFinancial Disclosures
Costain Group Announces 2025 AGM Details and Annual Report Release
Neutral
Apr 8, 2025

Costain Group PLC has announced the details of its 2025 Annual General Meeting (AGM), scheduled for May 15, 2025, in London. Shareholders are encouraged to participate by voting and submitting questions in advance. The AGM Notice and the Annual Report for the year ending December 31, 2024, are now available online and through the National Storage Mechanism. The Board emphasizes the importance of informed voting and will provide responses to shareholder inquiries prior to the meeting.

Delistings and Listing Changes
Costain Group PLC Announces New Share Listing
Neutral
Apr 2, 2025

Costain Group PLC has applied for the admission of 3,800,000 new ordinary shares to the UK Listing Authority’s Official List and the London Stock Exchange. This move is part of the company’s Long Term Incentive Plan, with shares expected to be admitted on 7 April 2025, enhancing the company’s capital structure and potentially impacting shareholder value.

M&A TransactionsBusiness Operations and Strategy
Oasis Management Acquires Significant Stake in Costain Group
Neutral
Apr 1, 2025

Oasis Management Company Ltd., a Hong Kong-based entity, has acquired a significant financial instrument stake in Costain Group PLC, crossing the 5% threshold of voting rights. This acquisition could influence Costain’s strategic decisions and impact its market positioning, given Oasis Management’s substantial voting power.

Business Operations and Strategy
Costain Chosen as Programme Delivery Partner for Urenco’s Infrastructure Upgrade
Positive
Mar 20, 2025

Costain has been selected by Urenco as the programme delivery partner for a significant infrastructure upgrade at Urenco’s Capenhurst site in Cheshire. This partnership is part of Costain’s strategic focus on growth in strong markets, aiming to deliver a more prosperous, resilient, and decarbonised UK by leveraging their expertise in critical national infrastructure.

DividendsBusiness Operations and StrategyFinancial Disclosures
Costain Group Reports Strong Financial Performance and Record Forward Work Position
Positive
Mar 11, 2025

Costain Group PLC reported a robust financial performance for the year ended December 2024, with a record increase in its forward work position to £5.4 billion. Despite a slight decline in revenue to £1,251 million, the company achieved significant growth in adjusted operating profit, operating margins, and earnings per share. The company’s strategic focus on high-quality contracts and investment in chosen markets has resulted in improved financial metrics and increased confidence in future growth prospects. The doubling of the full-year dividend reflects the company’s strong cash position and commitment to enhancing shareholder returns.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.