LSE:BAB

Stock Analysis Report

Executive Summary

Babcock International Group PLC, together with its subsidiaries, provides engineering services for marine, land, aviation, and nuclear sectors in the United Kingdom and internationally.


Snowflake Analysis

Very undervalued 6 star dividend payer.


Similar Companies

Share Price & News

How has Babcock International Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: BAB's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-7.4%

BAB

-1.2%

GB Commercial Services

-0.9%

GB Market


1 Year Return

-11.5%

BAB

23.2%

GB Commercial Services

6.2%

GB Market

Return vs Industry: BAB underperformed the UK Commercial Services industry which returned 21.7% over the past year.

Return vs Market: BAB underperformed the UK Market which returned 6.6% over the past year.


Shareholder returns

BABIndustryMarket
7 Day-7.4%-1.2%-0.9%
30 Day-19.4%-2.6%-3.1%
90 Day-14.2%4.8%3.9%
1 Year-5.8%-11.5%26.9%23.2%11.9%6.2%
3 Year-36.0%-44.2%24.4%13.8%17.3%2.4%
5 Year-41.0%-51.2%32.0%10.6%34.1%3.2%

Price Volatility Vs. Market

How volatile is Babcock International Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Babcock International Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: BAB (£4.93) is trading below our estimate of fair value (£10.63)

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


Price To Earnings Ratio

PE vs Industry: BAB is good value based on its PE Ratio (9.2x) compared to the Commercial Services industry average (19.6x).

PE vs Market: BAB is good value based on its PE Ratio (9.2x) compared to the UK market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: BAB is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: BAB is good value based on its PB Ratio (0.9x) compared to the GB Commercial Services industry average (2.2x).


Next Steps

Future Growth

How is Babcock International Group forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

9.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: BAB's forecast earnings growth (9.6% per year) is above the savings rate (0.5%).

Earnings vs Market: BAB's earnings (9.6% per year) are forecast to grow slower than the UK market (12.1% per year).

High Growth Earnings: BAB's earnings are forecast to grow, but not significantly.

Revenue vs Market: BAB's revenue (3.2% per year) is forecast to grow slower than the UK market (3.4% per year).

High Growth Revenue: BAB's revenue (3.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: BAB's Return on Equity is forecast to be low in 3 years time (12.4%).


Next Steps

Past Performance

How has Babcock International Group performed over the past 5 years?

0.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: BAB has high quality earnings.

Growing Profit Margin: BAB's current net profit margins (6.1%) are higher than last year (5.2%).


Past Earnings Growth Analysis

Earnings Trend: BAB's earnings have grown by 0.2% per year over the past 5 years.

Accelerating Growth: BAB's earnings growth over the past year (12.5%) exceeds its 5-year average (0.2% per year).

Earnings vs Industry: BAB earnings growth over the past year (12.5%) underperformed the Commercial Services industry 17.1%.


Return on Equity

High ROE: BAB's Return on Equity (9.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Babcock International Group's financial position?


Financial Position Analysis

Short Term Liabilities: BAB's short term assets (£1.7B) exceed its short term liabilities (£1.6B).

Long Term Liabilities: BAB's short term assets (£1.7B) do not cover its long term liabilities (£2.6B).


Debt to Equity History and Analysis

Debt Level: BAB's debt to equity ratio (63.5%) is considered high.

Reducing Debt: BAB's debt to equity ratio has reduced from 67.3% to 63.5% over the past 5 years.

Debt Coverage: BAB's debt is not well covered by operating cash flow (16.8%).

Interest Coverage: BAB's interest payments on its debt are well covered by EBIT (7.6x coverage).


Balance Sheet

Inventory Level: BAB has a high level of physical assets or inventory.

Debt Coverage by Assets: BAB's debt is not covered by short term assets (assets are 0.9x debt).


Next Steps

Dividend

What is Babcock International Group's current dividend yield, its reliability and sustainability?

6.06%

Current Dividend Yield


Dividend Yield vs Market

company6.1%marketbottom25%1.8%markettop25%5.1%industryaverage2.7%forecastin3Years6.2%

Current dividend yield vs market & industry

Notable Dividend: BAB's dividend (6.09%) is higher than the bottom 25% of dividend payers in the UK market (1.81%).

High Dividend: BAB's dividend (6.09%) is in the top 25% of dividend payers in the UK market (5.1%)


Stability and Growth of Payments

Stable Dividend: BAB's dividends per share have been stable in the past 10 years.

Growing Dividend: BAB's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (56.2%), BAB's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: BAB's dividends in 3 years are forecast to be well covered by earnings (39.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.6yrs

Average management tenure


CEO

Archie Bethel (66yo)

3.4yrs

Tenure

UK£1,981,000

Compensation

Mr. Archibald Bethel, also known as Archie, CBE has been Chief Executive of Babcock International Group plc since September 1, 2016 and served as its Chief Operating Officer from April 1, 2016 to September ...


CEO Compensation Analysis

Compensation vs Market: Archie's total compensation ($USD2.58M) is about average for companies of similar size in the UK market ($USD2.22M).

Compensation vs Earnings: Archie's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Archibald Bethel
CEO & Executive Director3.4yrsUK£1.98m0.091% £2.3m
Franco Martinelli
Group Finance Director & Executive Director5.5yrsUK£1.03m0.066% £1.7m
John Davies
Chief Executive of Land & Executive Director7.1yrsUK£971.00k0.042% £1.0m
Jon Hall
Managing Director of Technology12.1yrsno datano data
Simon McGough
Director of Investor Relations0yrsno datano data
Jack Borrett
Group Company Secretary & General Counsel3.8yrsno datano data
Kate Hill
Group Director of Communications2.8yrsno datano data
Bob Whiley
Managing Director of Babcock Networks0yrsno datano data
Roger Hardy
Chief Executive of Aviation2.8yrsno data0.017% £432.5k
John Howie
Chief Executive of Marine & Technology Division0yrsno data0.029% £720.4k

3.6yrs

Average Tenure

58yo

Average Age

Experienced Management: BAB's management team is considered experienced (3.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Archibald Bethel
CEO & Executive Director3.4yrsUK£1.98m0.091% £2.3m
Franco Martinelli
Group Finance Director & Executive Director5.5yrsUK£1.03m0.066% £1.7m
John Davies
Chief Executive of Land & Executive Director7.1yrsUK£971.00k0.042% £1.0m
Kjersti Wiklund
Independent Non-Executive Director1.8yrsUK£60.00k0.00042% £10.5k
Ian Duncan
Independent Non-Executive Director9.3yrsUK£75.00kno data
Myles Lee
Independent Non-Executive Director4.8yrsUK£64.00k0.0059% £148.7k
Victoire de Margerie
Independent Non-Executive Director4yrsUK£64.00k0.00095% £23.8k
Jeff Randall
Independent Non-Executive Director5.8yrsUK£75.00k0.0012% £30.3k
David Omand
Senior Independent Director8.1yrsUK£71.00kno data
Linda Cairnie
Independent Chairman0.6yrsno data0.0040% £99.1k

5.7yrs

Average Tenure

61yo

Average Age

Experienced Board: BAB's board of directors are considered experienced (5.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: BAB insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Babcock International Group PLC's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Babcock International Group PLC
  • Ticker: BAB
  • Exchange: LSE
  • Founded: 1891
  • Industry: Diversified Support Services
  • Sector: Commercial Services
  • Market Cap: UK£2.503b
  • Shares outstanding: 505.36m
  • Website: https://www.babcockinternational.com

Number of Employees


Location

  • Babcock International Group PLC
  • 33 Wigmore Street
  • London
  • Greater London
  • W1U 1QX
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
BABLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
BCKI.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
BW3DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
BABLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
BABB NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNJan 1992
BCKI.YOTCPK (Pink Sheets LLC)ADRUSUSDApr 2011

Biography

Babcock International Group PLC, together with its subsidiaries, provides engineering services for marine, land, aviation, and nuclear sectors in the United Kingdom and internationally. The company’s Marine segment offers life support services for submarines, naval ships, and infrastructure. Its Land segment offers large-scale critical vehicle fleet management, equipment support, and technical training services for military engineers, as well as delivers engineering services. The company’s Aviation segment provides critical engineering services to defense and civil customers, including pilot training, equipment support, and airbase management. It also operates aviation fleets that provide delivering emergency and offshore services. The company’s Nuclear segment offers various engineering services in support of decommissioning programs and projects. It is also involved in the provision of nuclear engineering services in training and operation support; new build program management, design, and installation; and critical safety training for public and private customers. Babcock International Group PLC was founded in 1891 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 20:34
End of Day Share Price2020/02/19 00:00
Earnings2019/09/30
Annual Earnings2019/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.