Balfour Beatty plc (LSE:BBY)’s share price is looking “unusually cheap” at a 9.9 times forward price-to-earnings ratio, Panmure Liberum analysts said following the FTSE 250-listed infrastructure group’s interim results.
Presumably, Panmure sees even more value in the stock given its 2.5% dip after Balfour delivered mixed messages in its financial reports.
As for the positives, the group’s forward order book increased by £100 million to £16.6 billion, while average net cash was also higher than a year earlier at £735 million.
Construction margins increased from 2% to 2.3%, while interim dividends increased by 9% year on year.
But Panmure took issue with Balfour’s declining revenue growth, with sales increasing just 3% year on year compared to 9% in 2023’s first half.
Balfour also took a £7 million hit on infrastructure investments tied to the cancellation of a student accommodation project and an increase in the costs in its US military housing portfolio.
Panmure retained its full-year earnings estimates, though “we assume a £3m investment loss with the offset in UK Construction and Support Services”.
All in all, the positives outweigh the negatives, with Panmure giving the stock a buy rating with a 475p price target against a current spot price of 399.6p.