Costain (COST) AI Stock Analysis

• Market Cap: £472.09M
• Dividend Yield: 1.88%
• Average Volume (3M): 1.07M
• Price to Earnings (P/E): 15.1
• Beta (1Y): 0.82
• 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: £210.00
• Price Target Upside: 18.64% 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: 201.00p ▲(13.56% 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

Low leverage / strong equity

A high equity ratio and very low debt-to-equity provide durable financial flexibility, reducing refinancing risk and enabling Costain to pursue large, capital-intensive infrastructure contracts and investments in technology without stressing liquidity over the next 2-6 months.

Recurring frameworks and partnerships

Long-term frameworks, government and utility partnerships and alliances give repeatable contract pipelines and revenue visibility. This reduces bid-to-win volatility, supports steady backlog conversion and underpins sustainable cashflows and strategic investment plans.

Operating cash generation vs net income

Operating cash conversion above 1.0 and meaningful free cash flow demonstrate the business converts earnings to cash, supporting working capital, project funding and reinvestment. This resiliency aids sustainable operations and reduces reliance on external financing.

Negative Factors

Modest profit margins

Low operating and net margins leave limited buffer for project cost overruns and reduce capacity to reinvest in R&D or bid competitively on fixed-price contracts. Structurally modest margins constrain long-term profitability improvement unless operational leverage increases.

Declining free cash flow efficiency

A falling FCF-to-net-income ratio signals weaker cash conversion despite positive absolute FCF. Over months this can erode liquidity cushions, limit discretionary capex or dividend capacity, and increase exposure to timing swings in project receipts and working capital.

Weak recent revenue trend

Reported negative revenue growth indicates pressure on top-line momentum. Sustained declines or volatility in project revenues can reduce scale benefits, strain fixed-cost absorption and weaken the company’s negotiating leverage with suppliers and clients over the medium term.

Costain Business Overview & Revenue Model

Company Description

Costain Group PLC provides smart infrastructure solutions for the energy, water, transportation, and defense markets in the United Kingdom. The company operates through two segments, Transportation and Natural Resources. The Transportation segment operates in the road, rail, and integrated transport markets. The Natural Resources segment operates in the water, energy, and defense markets. It offers future shaping strategic consultancy, consultancy and advisory, digital technology, asset optimization, and complex program delivery solutions and services. The company was founded in 1865 and is headquartered in Maidenhead, the United Kingdom.

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 shows 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. Despite the positive income trajectory, the margins remain modest, and cash flow generation has seen a decline, 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: 177.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 177 is above the 20-day moving average (MA) of 165.62, above the 50-day MA of 159.04, and above the 200-day MA of 143.59, indicating a bullish trend. The MACD of 4.79 indicates Negative momentum. The RSI at 69.23 is Neutral, neither overbought nor oversold. The STOCH value of 80.05 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KLR	80 Outperform	£1.22B	9.07	24.69%	3.08%	-1.17%	12.31%
MGNS	78 Outperform	£2.32B	15.18	24.19%	2.49%	6.93%	21.50%
COST	78 Outperform	£472.09M	15.14	13.21%	1.88%	-12.98%	5.51%
BBY	76 Outperform	£3.46B	19.93	16.34%	1.80%	9.97%	-15.46%
KIE	74 Outperform	£937.82M	17.49	10.87%	3.19%	4.40%	31.59%
GFRD	71 Outperform	£511.07M	15.54	27.48%	3.65%	5.78%	-6.80%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Costain Corporate Events

Costain wins £100m contract for new M5 junction serving UK EV gigafactory

Costain Group has secured a contract worth about £100m over five years to design and build a new M5 motorway junction, 22A, in Somerset, awarded through the Regional Delivery Partnership framework. The junction will provide access to the Gravity Smart Campus and Agratas’s planned £4bn gigafactory, set to be Britain’s largest electric vehicle battery manufacturing facility, positioning Costain as delivery integration partner and main works contractor responsible for design, engineering, programme delivery and supply chain management, and underlining its role in critical national infrastructure that supports regional economic growth and the UK’s clean-energy industrial ambitions.

The most recent analyst rating on (GB:COST) stock is a Buy with a £197.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Costain frees up capital for higher shareholder returns after pension deal and strong FY25 trading

Costain has reached a new agreement on its defined benefit pension scheme that removes a long‑standing dividend parity constraint and eliminates the need for further cash contributions until 2031, freeing up capital to enhance shareholder returns. In light of a strong balance sheet, surplus in the scheme and robust trading in FY 25, the board intends to move to a 3.0x dividend cover policy that would almost double cash dividends in FY 26 and to launch a £20m share buyback next year, while continuing to review the capital structure for potential additional returns. Operationally, FY 25 performance is expected to be in line with market profit expectations, with adjusted operating margins exceeding the 4.5% target and year-end net cash of £190m ahead of consensus, supported by timing benefits in working capital. The company has also secured a series of significant long-term contracts, including a utilities delivery partner role for Sellafield worth up to £1bn over 15 years and major nuclear and highways work, underpinning management’s confidence in further progress in FY 26 and a ‘step change’ in performance from FY 27 onwards.

The most recent analyst rating on (GB:COST) stock is a Buy with a £177.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Costain Sets Dates for 2025 Trading Update and Full-Year Results

Costain Group has scheduled a trading update for the year ending 31 December 2025 to be released on 26 January 2026, with full-year results to follow on 10 March 2026. The timetable underlines the company’s efforts to provide timely visibility on its financial performance to investors and other stakeholders as it pursues its strategy of delivering sustainable infrastructure solutions across key UK sectors.

The most recent analyst rating on (GB:COST) stock is a Buy with a £177.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

Costain Director Increases Stake with Share Purchase

Costain Group PLC announced that Fiona MacAulay, a Non-Executive Director, has purchased 6,347 ordinary shares at £1.57 per share, representing a minor stake in the company. This transaction reflects a personal investment by a key member of the board, potentially signaling confidence in the company’s future prospects and stability, which could positively influence stakeholder perception.

The most recent analyst rating on (GB:COST) stock is a Buy with a £177.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

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.

The most recent analyst rating on (GB:COST) stock is a Buy with a £170.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

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.

The most recent analyst rating on (GB:COST) stock is a Buy with a £170.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

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.

The most recent analyst rating on (GB:COST) stock is a Buy with a £170.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.

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.

The most recent analyst rating on (GB:COST) stock is a Buy with a £170.00 price target. To see the full list of analyst forecasts on Costain stock, see the GB:COST Stock Forecast page.