Last Update 22 May 26
GFRD: Affordable Housing Framework Wins Will Support Future Rerating
Analysts have kept their £6.52 price target for Galliford Try Holdings unchanged, with only small adjustments to assumptions such as the discount rate, revenue growth, profit margin and future P/E contributing to their refreshed view.
What's in the News
- Galliford Try Holdings completed a share buyback program announced on 17 September 2025, repurchasing a total of 1,957,703 shares, representing 1.97% of the company, for £10 million across tranches running from 17 September 2025 to 31 December 2025 and from 1 January 2026 to 22 April 2026 (Key Developments).
- Between 1 January 2026 and 22 April 2026, the company repurchased 623,405 shares, representing 0.63% of the company, for £3.2 million as part of this buyback activity (Key Developments).
- Galliford Try Holdings was appointed to a new £750 million affordable homes framework by Sovereign Network Group, covering mid and high value bands across London and East and South regions, and the high value band in the West region, alongside recent framework appointments with Hyde Group and a standalone contract with Clarion Housing Group at the City Place scheme in Chester (Key Developments).
- The Board declared an interim dividend of 6.5 pence per share, compared with 5.5 pence per share in H1 2025, with payment scheduled for 10 April 2026 to shareholders on the register at the close of business on 13 March 2026, and the shares marked ex dividend on 12 March 2026 (Key Developments).
Valuation Changes
- Fair Value: The fair value estimate of £6.52 is unchanged, with no adjustment to the target level.
- Discount Rate: The discount rate has risen slightly, moving from 9.11% to 9.63%.
- Revenue Growth: The revenue growth assumption is broadly stable, remaining at 4.01%.
- Net Profit Margin: The net profit margin assumption is broadly unchanged, remaining at 2.14%.
- Future P/E: The future P/E assumption has risen slightly, from 18.67x to 18.94x.
Key Takeaways
- Expansion into energy and capital maintenance markets is set to enhance revenue growth by leveraging expertise in higher-margin areas.
- Reentering the affordable homes market presents significant opportunities, utilizing the company's construction skills for future revenue growth.
- Execution risks in reentering the affordable homes market, combined with economic and sector-specific challenges, threaten Galliford Try's revenue projections and cash flow stability.
Catalysts
About Galliford Try Holdings- Operates in the construction business in the United Kingdom.
- Galliford Try's expansion into energy and capital maintenance markets, particularly in water and wastewater treatment, is expected to enhance revenue and margin growth by leveraging existing expertise in adjacent, higher-margin markets.
- Reentering the affordable homes market, now unrestricted after selling previous housing businesses, offers significant revenue opportunities given the company's skills in building mid-rise blocks of flats, expected to drive future revenue growth.
- Modern methods of construction, such as off-site manufacturing and using digital tools, are anticipated to enhance efficiency and reduce costs, thereby potentially increasing net margins by reducing rework and improving project delivery times.
- The company's strategy of securing long-term frameworks and negotiated contracts in infrastructure sectors like AMP8 ensures a stable and predictable revenue stream, safeguarding against market volatility and promising sustained revenue and margin growth.
- A strong balance sheet, with no debt or pension liabilities, coupled with strategic M&A focused on margin-accretive businesses, positions Galliford Try to increase earnings through reinvestment and selective acquisitions while maintaining robust shareholder returns.
Galliford Try Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming Galliford Try Holdings's revenue will grow by 4.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 1.9% today to 2.1% in 3 years time.
- Analysts expect earnings to reach £45.4 million (and earnings per share of £0.44) by about May 2029, up from £36.4 million today.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 19.0x on those 2029 earnings, up from 13.9x today. This future PE is greater than the current PE for the GB Construction industry at 14.5x.
- Analysts expect the number of shares outstanding to grow by 0.26% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.63%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- The company faces a challenge in execution risk related to reentering the affordable homes market, which could impact its revenue growth projections.
- An economic downturn or public spending cuts could affect their long-term government framework contracts, thus impacting predictable revenue streams.
- The company’s strong cash position may be affected if it does not effectively manage operational risks, given that they often work on long-term and complex construction projects.
- The high dependency on framework agreements puts pressure on maintaining competitive operational efficiency and cost management to achieve projected margins.
- Any disruption or failure in key sectors such as water (e.g., Thames Water issues) could affect their order fulfillment and cash flow stability.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of £6.52 for Galliford Try Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be £2.1 billion, earnings will come to £45.4 million, and it would be trading on a PE ratio of 19.0x, assuming you use a discount rate of 9.6%.
- Given the current share price of £5.21, the analyst price target of £6.52 is 20.1% higher.
- 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.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.