Costain (COST) AI Stock Analysis

• Market Cap: £421.94M
• Dividend Yield: 1.9%
• Average Volume (3M): 1.07M
• Price to Earnings (P/E): 13.5
• Beta (1Y): 0.67
• Revenue Growth: -12.98%
• EPS Growth: 5.51%
• Country: UK
• Employees: 3,095
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 0.06
• Shares Outstanding: 266,714,900
• 10 Day Avg. Volume: 1,084,180
• 30 Day Avg. Volume: 1,072,824
• PEG Ratio: 0.26
• Price to Book (P/B): 1.24
• Price to Sales (P/S): 0.23
• P/FCF Ratio: 7.86
• 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: £180.00
• Price Target Upside: 13.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: 177.00p ▲(11.88% Upside)

Costain's overall stock score reflects a strong financial foundation, positive technical indicators, and strategic corporate developments. The company's stable financial performance and recent contract wins are significant strengths. However, modest profit margins and declining cash flow efficiency are areas for improvement. The valuation is fair, and the technical outlook is positive, supporting a favorable stock assessment.

Positive Factors

Strong Balance Sheet

A strong balance sheet with low leverage reduces financial risk and provides a solid foundation for future growth and investment opportunities.

Effective Debt Management

Effective debt management with low leverage enhances financial stability, allowing the company to navigate economic fluctuations and invest in growth.

Profitability Improvements

Improvements in profitability metrics indicate operational efficiency and effective use of equity, supporting long-term financial health and shareholder value.

Negative Factors

Declining Cash Flow Generation

Declining cash flow generation can strain liquidity and limit the company's ability to invest in growth initiatives, impacting long-term financial flexibility.

Modest Margins

Modest profit margins compared to industry standards suggest limited pricing power and efficiency, potentially affecting competitive positioning and profitability.

Revenue Growth Challenges

Negative revenue growth highlights challenges in market expansion and client acquisition, which may hinder long-term business development and market share.

Costain Business Overview & Revenue Model

Company Description

Costain Group PLC is a UK-based engineering and construction company that specializes in delivering integrated solutions across various sectors, including infrastructure, water, energy, and transportation. The company focuses on providing innovative technology and project management services aimed at enhancing the efficiency and sustainability of its clients' operations. Costain is known for its commitment to transforming infrastructure through digital solutions and collaborative working, ensuring that projects meet both financial and environmental objectives.

How the Company Makes Money

Costain generates revenue primarily through contracts for engineering and construction services, which include project management, design, and consultancy across its core sectors. The company's revenue model is largely project-based, with income derived from fixed-price contracts, cost-reimbursable contracts, and time-and-materials arrangements. Key revenue streams encompass major infrastructure projects, maintenance services, and technology solutions. Significant partnerships with government bodies, utility companies, and private sector clients enhance its project pipeline, while ongoing investment in research and development allows Costain to offer cutting-edge solutions that can lead to additional revenue opportunities. The company also benefits from long-term frameworks and alliances, which provide recurring revenue and stability.

Costain Financial Statement Overview

Summary

Costain demonstrates a stable financial outlook with improvements in profitability and a strong balance sheet. The company has effectively managed its debt, maintaining low leverage while achieving a healthy ROE. However, margins remain modest, and cash flow generation has declined, indicating areas for future enhancement.

Income Statement

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

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

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.14B	1.25B	1.33B	1.42B	1.14B	978.40M
Gross Profit	110.60M	103.30M	103.50M	82.20M	39.10M	-59.10M
EBITDA	48.10M	52.60M	50.90M	47.20M	4.60M	-65.10M
Net Income	31.30M	30.60M	22.10M	25.90M	-5.80M	-78.00M
Balance Sheet
Total Assets	535.30M	547.20M	468.60M	482.20M	532.40M	489.90M
Cash, Cash Equivalents and Short-Term Investments	144.90M	158.50M	164.40M	123.80M	159.40M	150.90M
Total Debt	23.30M	25.80M	24.30M	29.50M	66.20M	80.10M
Total Liabilities	291.80M	311.50M	249.20M	271.00M	333.40M	333.40M
Stockholders Equity	243.50M	235.70M	219.40M	211.20M	199.00M	156.50M
Cash Flow
Free Cash Flow	12.10M	37.20M	55.60M	13.60M	27.30M	-50.90M
Operating Cash Flow	15.90M	42.70M	55.70M	14.10M	29.50M	-46.80M
Investing Cash Flow	-5.00M	-9.00M	-100.00K	-1.30M	-2.20M	4.50M
Financing Cash Flow	-27.70M	-25.60M	-15.00M	-48.40M	-18.80M	12.90M

Costain Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 158.20
• 50DMA: Positive
• 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:COST, the sentiment is Positive. The current price of 158.2 is above the 20-day moving average (MA) of 154.57, above the 50-day MA of 152.58, and above the 200-day MA of 135.24, indicating a bullish trend. The MACD of 2.45 indicates Negative momentum. The RSI at 60.80 is Neutral, neither overbought nor oversold. The STOCH value of 62.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:COST.

Costain Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGNS	78 Outperform	£2.21B	14.46	24.19%	2.49%	6.93%	21.50%
COST	78 Outperform	£421.94M	13.53	13.21%	1.90%	-12.98%	5.51%
BBY	76 Outperform	£3.51B	20.12	16.34%	1.79%	9.97%	-15.46%
KIE	74 Outperform	£937.82M	17.49	10.87%	0.92%	4.40%	31.59%
RNWH	73 Outperform	£708.45M	14.51	19.85%	2.16%	7.13%	17.31%
GFRD	71 Outperform	£507.94M	15.51	27.48%	3.63%	5.78%	-6.80%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Costain Corporate Events

Costain’s Tony Quinlan Appointed Chair of NextEnergy Solar Fund

Costain Group PLC announced that Tony Quinlan, a Non-Executive Director and Chair of the Audit and Risk Committee, has been appointed as Non-Executive Chair of NextEnergy Solar Fund Limited, effective December 3, 2025. This appointment highlights Costain’s strategic alignment with sustainable energy initiatives and may enhance its influence in the renewable energy sector.

Costain Secures £75m Contract Extension with EDF for Nuclear Project Services

Costain Group PLC has secured a five-year extension to its framework contract with EDF, valued at £75 million, to provide project controls services at EDF’s eight nuclear power stations in the UK. This extension, which continues a partnership that began in 2017, underscores Costain’s strategy of building long-term relationships with critical infrastructure asset owners, contributing to the safety and efficiency of nuclear operations and supporting economic prosperity.

Costain Group Announces Strategic Non-Executive Appointment

Costain Group PLC announced the appointment of Fiona MacAulay as a Non-Executive Director of Rosebank Industries plc, effective 14 November 2025. This strategic move highlights Costain’s commitment to strengthening its governance and industry influence, as MacAulay will also chair Rosebank’s Remuneration Committee and join their Nomination and Audit Committees, potentially enhancing collaboration between the companies.

Costain Group Announces Total Voting Rights and Capital Update

Costain Group PLC has announced its total voting rights and capital as of 31 October 2025, with an issued share capital of 266,714,895 ordinary shares, each carrying one vote. This update aligns with the FCA’s Disclosure Guidance and Transparency Rules, allowing shareholders to calculate their interests in the company, potentially impacting shareholder decisions and market perceptions.

Costain Group PLC Announces Scrip Dividend Option for Shareholders

Costain Group PLC announced that shareholders have opted to receive 111,520 ordinary shares in lieu of cash for their interim dividend for the year ending 31 December 2025. This decision follows the approval of the scrip dividend scheme at the 2025 Annual General Meeting. The new shares will be admitted to the UK Listing Authority’s Official List and traded on the London Stock Exchange starting 17 October 2025, aligning with the company’s strategic financial management and offering flexibility to its investors.

Costain Group Grants Sharesave Options to Employees

Costain Group PLC has announced the granting of options over 3,071,313 ordinary shares under its 2022 Sharesave Plan to eligible employees, including key executives. The options, with an exercise price of £1.02 per share, are set to vest on 1 December 2028, potentially impacting the company’s employee retention and motivation strategies.

Costain Secures £1bn Contract with Sellafield for Utilities Delivery

Costain Group PLC has been selected as the Utilities Delivery Partner for Sellafield Ltd’s Infrastructure Delivery Partnership, a contract valued at up to £1bn. This long-term agreement, which includes refurbishing and replacing utility systems to support Sellafield’s decommissioning program, highlights Costain’s strategic focus on building strong relationships and its integral role in the civil nuclear energy market, reinforcing its position as a key player in the UK’s nuclear decommissioning efforts.

Costain Announces Scrip Dividend Reference Price for 2025

Costain Group PLC has announced the Scrip Dividend Reference Price for its interim dividend for the year ending December 31, 2025, set at 127.28 pence per ordinary share. This price is calculated based on the average market quotations of the company’s shares over five consecutive days starting from the ex-dividend date. Shareholders who wish to receive the scrip dividend must submit a mandate form by September 26, 2025. The interim dividend, including the scrip dividend, will be paid on October 17, 2025, to shareholders on record as of September 12, 2025.