ESG Investment Trends Will Unlock Resilient Global Infrastructure

Key Takeaways

• Strategic focus on sustainable, technically complex infrastructure and international diversification positions Webuild for resilient order growth and continued revenue and margin expansion.
  
• Operational improvements and strong financial flexibility enable reinvestment for future large-scale projects, supporting long-term profitability and growth potential.
  
• Heavy dependence on complex mega-projects and international expansion exposes the company to earnings instability, financing risks, and challenges to sustainable long-term growth.

Catalysts

Engages in the construction businesses worldwide.

• The global acceleration of infrastructure investment-driven by the need for climate resilience, decarbonization (including renewable energy, hydro, and sustainable transport), and economic recovery programs in major economies-supports a historically high multi-year backlog (€59bn), providing strong revenue visibility and a stable foundation for future top-line growth.
  
• Webuild's increasing focus on technically complex, ESG-aligned projects (over 70% of backlog from sustainable mobility and high-impact infrastructure) positions the company to benefit as governments and investors prioritize green and resilient infrastructure, supporting order book expansion and long-term revenue growth.
  
• The group's international diversification, with 65% of revenues outside Italy (notably strong momentum in Australia, the US, and the Middle East), reduces geographic risk and enables Webuild to access the most attractive global infrastructure markets, sustaining both revenue and margin growth over the medium term.
  
• Ongoing operational transformation-including selective bidding, improved contract management, and advanced risk mitigation (indexed pricing, collaborative contract models, and digital tools)-is driving margin expansion (100+ bps YoY) and net margin improvement, which are likely underappreciated by the market if current valuation is low.
  
• Enhanced cash flow generation and a strengthened balance sheet (net cash position, lower leverage, and investment grade ambitions) increase financial flexibility, supporting future earnings through reinvestment in growth, further margin improvement initiatives, and the ability to capture large-scale projects (e.g., Messina Bridge, NATO dual-use infrastructure) not yet reflected in current financial forecasts.

Webuild Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Webuild's revenue will grow by 7.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.0% today to 2.7% in 3 years time.
• Analysts expect earnings to reach €408.8 million (and earnings per share of €0.33) by about July 2028, up from €247.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.3x on those 2028 earnings, down from 15.9x today. This future PE is lower than the current PE for the GB Construction industry at 16.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.6%, as per the Simply Wall St company report.

Webuild Future Earnings Per Share Growth

Risks

• Webuild's heavy reliance on a few exceptionally large, technically complex projects (such as the Messina Bridge and Australia's Snowy 2.0) means that any execution delays, cost overruns, or contract disputes on these projects could result in significant revenue volatility and margin compression, jeopardizing the stability of earnings and operational cash flow.
  
• Exposure to currency fluctuations-particularly with a significant portion of cash and backlog linked to the US dollar and Saudi riyal-presents ongoing risks to reported net income and financial position, which could erode profit predictability over time, especially in periods of FX volatility.
  
• The sustainability of the current backlog may be affected by developed market constraints: while 90% of projects are in 'low-risk' regions, future growth may be limited by demographic stagnation or public budget constraints in Europe and North America, weakening new project intake and long-term revenue expansion.
  
• Despite recent improvements, gross leverage still remains considerable, and ambitious international expansion plus large capital expenditures could increase exposure to higher interest rates or tightened credit conditions, risking increased financing costs and balance sheet vulnerability in a downturn.
  
• The persistent legacy of underperforming US contracts-and delayed breakeven in this segment-signals ongoing risk management and execution challenges, which, if replicated in new markets or contract types, may offset gains from recent operational improvements and undermine overall net margin progress.

Valuation

• The analysts have a consensus price target of €4.3 for Webuild based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €15.3 billion, earnings will come to €408.8 million, and it would be trading on a PE ratio of 15.3x, assuming you use a discount rate of 13.6%.
  
• Given the current share price of €3.96, the analyst price target of €4.3 is 7.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.