Infrastructure group Costain (COST) has never been busier with record workloads pencilled in. In its end of year trading update the group says it finished 2018 with an order book worth £4.2bn, its largest ever, and up on the £3.9bn equivalent of a year ago.
Costain provides construction and building services to many large customers, including Network Rail and Highways England for whom it runs large, multi-year infrastructure projects.
With another £600m of contracts it could potentially win (it is currently preferred bidder), this is the sort of start to the New Year investors might have hoped for after a testing year for the share price in 2018.
Today the shares are up more than 6% at 344.5p, having initially leapt 11% in early trading.
In November the firm announced it had won a six-year contract from Highways England worth £1.5bn for the upgrade of roads in the north and east of England.
PROFITS IN LINE, CASH POSITION STRONG
As well as updating the market on its order book the company confirmed that full year profits will be in line with the board and the market’s expectations.
On that basis the shares are trading on around 11 times this year's earnings and 10 times next year’s earnings after today’s gains.
The group’s year-end net cash position is lower than the previous year but is still impressive at £110m. The previous year’s figure of £178m was helped by the timing of payments.
During the year the company had an average month-end net cash balance of £77m which is reassuring given the cash-flow woes of other firms in the infrastructure market.
Analysts are unanimously positive on the stock with the consensus target price pitched at 515p, implying roughly 50% upside if the optimism of the City forecasters proves correct.
