Babcock International Group PLC

DB:BW3 Stock Report

Market Cap: €3.1b

Babcock International Group Valuation

Is BW3 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of BW3 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BW3 (€6.43) is trading below our estimate of fair value (€14.18)

Significantly Below Fair Value: BW3 is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for BW3?

Key metric: As BW3 is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for BW3. This is calculated by dividing BW3's market cap by their current earnings.
What is BW3's PE Ratio?
PE Ratio13.6x
EarningsUK£192.50m
Market CapUK£2.62b

Price to Earnings Ratio vs Peers

How does BW3's PE Ratio compare to its peers?

The above table shows the PE ratio for BW3 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average23.6x
OHB OHB
12.9x11.0%€898.2m
MTX MTU Aero Engines
24.1x11.2%€17.1b
RHM Rheinmetall
39.2x29.0%€26.8b
FQT Frequentis
18.5x14.9%€317.1m
BW3 Babcock International Group
13.6x14.2%€2.6b

Price-To-Earnings vs Peers: BW3 is good value based on its Price-To-Earnings Ratio (13.6x) compared to the peer average (23.6x).

Price to Earnings Ratio vs Industry

How does BW3's PE Ratio compare vs other companies in the European Aerospace & Defense Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
BW3 13.6xIndustry Avg. 24.6xNo. of Companies9PE020406080100+
0 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: BW3 is good value based on its Price-To-Earnings Ratio (13.6x) compared to the European Aerospace & Defense industry average (24.3x).

Price to Earnings Ratio vs Fair Ratio

What is BW3's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BW3 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio13.6x
Fair PE Ratio17.3x

Price-To-Earnings vs Fair Ratio: BW3 is good value based on its Price-To-Earnings Ratio (13.6x) compared to the estimated Fair Price-To-Earnings Ratio (17.3x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst BW3 forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
Current€6.43
€7.51
+16.9%
12.2%€9.00€5.88n/a9
Nov ’25€5.55
€7.30
+31.6%
10.6%€8.63€5.88n/a9
Oct ’25€5.60
€7.26
+29.7%
10.4%€8.65€5.89n/a10
Sep ’25€6.32
€7.07
+11.9%
9.1%€8.41€6.43n/a11
Aug ’25€6.20
€7.17
+15.6%
8.8%€8.56€6.54n/a11
Jul ’25€6.11
€6.82
+11.6%
8.4%€7.63€5.97n/a11
Jun ’25€6.56
€6.58
+0.4%
10.5%€7.52€5.23n/a10
May ’25€5.90
€6.31
+7.0%
8.6%€7.41€5.23n/a10
Apr ’25€6.27
€6.31
+0.6%
8.6%€7.41€5.23n/a10
Mar ’25€5.70
€6.31
+10.6%
8.6%€7.41€5.23n/a10
Feb ’25€5.57
€6.01
+8.0%
11.0%€7.12€4.67n/a10
Jan ’25€4.47
€5.71
+28.0%
16.4%€7.11€3.79n/a10
Dec ’24€4.61
€5.58
+21.3%
15.1%€6.51€3.75n/a10
Nov ’24€4.42
€5.21
+17.9%
19.6%€6.68€3.74€5.5510
Oct ’24€4.84
€5.17
+6.7%
19.0%€6.76€3.75€5.6010
Sep ’24€4.52
€4.92
+8.8%
17.6%€6.43€3.76€6.3210
Aug ’24€4.31
€4.97
+15.5%
16.8%€6.48€3.79€6.2011
Jul ’24€3.24
€4.55
+40.8%
12.4%€5.31€3.75€6.1110
Jun ’24€3.57
€4.55
+27.6%
12.4%€5.31€3.75€6.5610
May ’24€3.48
€4.50
+29.4%
12.4%€5.22€3.69€5.9010
Apr ’24€3.34
€4.50
+34.9%
13.0%€5.37€3.67€6.2710
Mar ’24€3.70
€4.52
+22.2%
12.9%€5.35€3.66€5.7010
Feb ’24€3.30
€4.60
+39.3%
12.3%€5.44€3.72€5.5711
Jan ’24€3.06
€4.60
+50.3%
12.3%€5.44€3.72€4.4711
Dec ’23€3.32
€4.60
+38.5%
12.3%€5.44€3.72€4.6111
Nov ’23€3.10
€4.63
+49.4%
14.1%€5.86€3.74€4.4210

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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