UK£2.57 - That's What Analysts Think Costain Group PLC (LON:COST) Is Worth After These Results
It's been a good week for Costain Group PLC (LON:COST) shareholders, because the company has just released its latest half-yearly results, and the shares gained 8.8% to UK£2.35. It was a credible result overall, with revenues of UK£543m and statutory earnings per share of UK£0.056 both in line with analyst estimates, showing that Costain Group is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the five analysts covering Costain Group are now predicting revenues of UK£1.24b in 2026. If met, this would reflect a solid 17% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 7.5% to UK£0.15. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.23b and earnings per share (EPS) of UK£0.15 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
View our latest analysis for Costain Group
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.9% to UK£2.57. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Costain Group at UK£2.97 per share, while the most bearish prices it at UK£2.00. 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. For example, we noticed that Costain Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 36% growth to the end of 2026 on an annualised basis. That is well above its historical decline of 2.0% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.3% annually. Not only are Costain Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Costain Group going out to 2028, and you can see them free on our platform here..
Even so, be aware that Costain Group is showing 1 warning sign in our investment analysis , you should know about...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.