Costain Group PLC (LON:COST) Analysts Are Pretty Bullish On The Stock After Recent Results

Simply Wall St · 03/13 12:36

Costain Group PLC (LON:COST) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of UK£1.3b were in line with what the analysts predicted, Costain Group surprised by delivering a statutory profit of UK£0.11 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Costain Group after the latest results.

Check out our latest analysis for Costain Group

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LSE:COST Earnings and Revenue Growth March 13th 2025

Taking into account the latest results, the five analysts covering Costain Group provided consensus estimates of UK£1.22b revenue in 2025, which would reflect a perceptible 2.5% decline over the past 12 months. Statutory earnings per share are predicted to surge 21% to UK£0.14. In the lead-up to this report, the analysts had been modelling revenues of UK£1.23b and earnings per share (EPS) of UK£0.14 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.6% to UK£1.40. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Costain Group at UK£1.87 per share, while the most bearish prices it at UK£1.05. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.5% by the end of 2025. This indicates a significant reduction from annual growth of 6.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% per year. It's pretty clear that Costain Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Costain Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Costain Group going out to 2027, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Costain Group that you should be aware of.