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Babcock - Interim results beat expectations

January 2023

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

In spite of share price weakness, defence contractor Babcock pleased investors with interim results to 30 September ahead of expectations with EBIT and eps ahead of forecasts at £121.7m and 15.8p. More dramatic still was that net debt to EBITDA fell to 1.9x (H1 ‘22: 2.8x) thanks to strong free cash flow while there’s no requirement for refinancing until 2026 after a €550m Eurobond was repaid last month. 85% of its debt is on fixed rates, up from 70%. Babcock maintained a strong contract backlog at £9.9 billion providing cover of 90% FY23 expected revenue. With guidance unchanged JP Morgan Cazenove expects eps of 33.8p year to March, rising to 40.4p in ‘24, for a prospective PE of 8.6 and then 7.2. Its price target is 475p. ...

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Crest Nicholson

Hill & Smith

Babcock (December 2024)

Babcock (September 2024)

Babcock - CMD highlights huge defence opportunities; terrific chart (April 2024)

Babcock International - Large reduction in net debt from £629m to £288m (February 2024)

Babcock - Shares above £4 as NATO lobbies members for more defence spend (November 2023)

Babcock (September 2023)

Babcock - Net debt £150m lower than expected (June 2023)

Babcock - Completed disposal program generates £570m to reduce debt (April 2023)

Babcock - Net debt falling faster than expectations (September 2022)

Babcock - Defence firm with contracted orders covering 70% sales on PE of just 9.2 (April 2022)

Babcock International - 78% of revenues secured for FY'17 (August 2016)

Babcock International (July 2015)

Babcock International - Order book increased by Â£5bn (February 2015)

Babcock International - Preferred bidder for £7bn contract (May 2014)

Babcock International - Acquires cyber security specialist (February 2014)

Babcock International - Bid pipeline remains promising (January 2014)

Babcock International - Two preferred biddder announcements due (October 2013)

Babcock International - Defence outsourcing firm aiming to exploit record Â£15.5bn bid pipeline (July 2013)

Babcock International - Gain to date:538% (December 2012)

Babcock International (May 2010)

Babcock International (March 2010)

Babcock International - Sharp reduction in borrowings (January 2010)

Babcock International (November 2009)

Babcock International - Positive AGM (August 2009)

Babcock - Defence services group sees near doubling in order book (June 2009)

Babcock International - Two largest divisions going well (March 2009)

Babcock - Strong results rally shares (December 2008)

Babcock International (October 2008)

Babcock - Sharp rise in order book (September 2008)

Babcock International - Huge order book for defence services firm (July 2008)

Babcock International (June 2008)

Babcock International - Eyes up big contract win from new aircraft carrier programme (May 2008)

Babcock International - Price target 640p (March 2008)

Babcock International - Defence services company makes key naval base acquisition (November 2007)

Babcock-International - Gains hit 125% (January 2007)

Babcock - Share price strength puts off bidders (June 2006)

Babcock International - Bid approach (May 2006)

Babcock International - Wins Â£500m contract (January 2006)

Babcock International - Big opportunity in defence outsourcing (September 2005)

With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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Babcock - Interim results beat expectations

January 2023

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