Babcock International Group PLC

LSE:BAB Stock Report

Market Cap: UK£2.6b

Babcock International Group Valuation

Is BAB 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 BAB when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BAB (£5.1) is trading below our estimate of fair value (£10.94)

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

Key Valuation Metric

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

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

The above table shows the Price to Earnings ratio for BAB. This is calculated by dividing BAB's market cap by their current earnings.
What is BAB's PE Ratio?
PE Ratio13.3x
EarningsUK£192.50m
Market CapUK£2.57b

Price to Earnings Ratio vs Peers

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

The above table shows the PE ratio for BAB vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average23.4x
QQ. QinetiQ Group
17.2x14.2%UK£2.4b
CHG Chemring Group
31.2x22.2%UK£969.2m
SNR Senior
20.1x31.5%UK£611.7m
CHRT Cohort
25x14.4%UK£382.3m
BAB Babcock International Group
13.3x13.9%UK£2.6b

Price-To-Earnings vs Peers: BAB is good value based on its Price-To-Earnings Ratio (13.3x) compared to the peer average (23.4x).

Price to Earnings Ratio vs Industry

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

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
BAB 13.3xIndustry Avg. 22.7xNo. of Companies7PE01632486480+
0 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: BAB is good value based on its Price-To-Earnings Ratio (13.3x) compared to the European Aerospace & Defense industry average (24x).

Price to Earnings Ratio vs Fair Ratio

What is BAB'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.

BAB PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio13.3x
Fair PE Ratio20.6x

Price-To-Earnings vs Fair Ratio: BAB is good value based on its Price-To-Earnings Ratio (13.3x) compared to the estimated Fair Price-To-Earnings Ratio (20.6x).

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 BAB forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUK£5.10
UK£6.22
+22.1%
12.1%UK£7.50UK£4.90n/a9
Nov ’25UK£4.70
UK£6.09
+29.6%
10.7%UK£7.20UK£4.90n/a9
Oct ’25UK£4.70
UK£6.04
+28.6%
10.5%UK£7.20UK£4.90n/a10
Sep ’25UK£5.24
UK£6.05
+15.4%
9.1%UK£7.20UK£5.50n/a11
Aug ’25UK£5.23
UK£6.03
+15.4%
8.8%UK£7.20UK£5.50n/a11
Jul ’25UK£5.15
UK£5.76
+12.0%
8.4%UK£6.45UK£5.04n/a11
Jun ’25UK£5.66
UK£5.60
-1.0%
10.5%UK£6.40UK£4.45n/a10
May ’25UK£5.09
UK£5.36
+5.5%
8.6%UK£6.30UK£4.45n/a10
Apr ’25UK£5.20
UK£5.36
+3.2%
8.6%UK£6.30UK£4.45n/a10
Mar ’25UK£5.04
UK£5.36
+6.4%
8.6%UK£6.30UK£4.45n/a10
Feb ’25UK£4.52
UK£5.15
+13.9%
11.0%UK£6.10UK£4.00n/a10
Jan ’25UK£3.95
UK£4.90
+24.1%
16.4%UK£6.10UK£3.25n/a10
Dec ’24UK£3.99
UK£4.85
+21.4%
15.1%UK£5.65UK£3.25n/a10
Nov ’24UK£3.94
UK£4.53
+14.9%
19.6%UK£5.81UK£3.25UK£4.7010
Oct ’24UK£4.13
UK£4.47
+8.2%
19.0%UK£5.85UK£3.25UK£4.7010
Sep ’24UK£3.89
UK£4.25
+9.2%
17.6%UK£5.55UK£3.25UK£5.2410
Aug ’24UK£3.71
UK£4.26
+14.8%
16.8%UK£5.55UK£3.25UK£5.2311
Jul ’24UK£2.83
UK£3.95
+39.7%
12.4%UK£4.60UK£3.25UK£5.1510
Jun ’24UK£3.09
UK£3.95
+27.7%
12.4%UK£4.60UK£3.25UK£5.6610
May ’24UK£3.17
UK£3.97
+25.0%
12.4%UK£4.60UK£3.25UK£5.0910
Apr ’24UK£2.99
UK£3.99
+33.4%
13.0%UK£4.75UK£3.25UK£5.2010
Mar ’24UK£3.29
UK£4.01
+21.9%
12.9%UK£4.75UK£3.25UK£5.0410
Feb ’24UK£3.03
UK£4.02
+32.6%
12.3%UK£4.75UK£3.25UK£4.5211
Jan ’24UK£2.82
UK£4.02
+42.3%
12.3%UK£4.75UK£3.25UK£3.9511
Dec ’23UK£2.95
UK£4.02
+36.1%
12.3%UK£4.75UK£3.25UK£3.9911
Nov ’23UK£2.80
UK£4.03
+43.7%
14.1%UK£5.10UK£3.25UK£3.9410

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

Discover undervalued companies

Senior

UK£611.7m

Designs, manufactures, and sells high-technology components and systems for the principal original equipment manufacturers in the aerospace, defense, land vehicle, and power and energy markets in the United States, the United Kingdom, and internationally.

SNR

UK£1.50

7D

4.6%

1Y

-9.2%

Chargeurs

€240.2m

Operates as a manufacturing and services company in France, Europe, the Americas, Asia, and internationally.

0E1Y

€10.23

7D

2.2%

1Y

17.5%

Rieter Holding

CHF 411.9m

Supplies systems for manufacturing yarn from staple fibers in spinning mills in Switzerland and internationally.

0QKA

CHF 90.50

7D

0.4%

1Y

6.5%