Source: Sharecast
Berenberg kept its positive stance on the Balfour Beatty's core earnings‑based businesses, applying a higher 11.2x FY26 EBIT multiple after what it called "good delivery".
Balfour Beatty posted a notably strong H1 on Wednesday, with profits from earnings‑based businesses up 42% to £153m. Construction services revenue rose 8% to £4.54bn, while underlying profit from operations jumped 40% to £87m, lifting margins to 1.9% from 1.5%. UK construction revenue was flat at £1.57bn, while US construction revenue surged 19% to £2.48bn, swinging from an £11m loss to a £22m profit - something Berenberg said was central to the firm's step‑up in performance.
Support services also impressed, with revenue up 10% to £727m and profit rising 43% to £66m, expanding margins to 9.1%. Management upgraded full‑year guidance for earnings‑based businesses to low double‑digit growth, ahead of its previous high single‑digit outlook.
Berenberg said Balfour Beatty was now at an "interesting strategic juncture", highlighting three areas - the potential to scale US operations further, the strengthened average net‑cash position, and opportunities to unlock more value from its investment portfolio over time.
The German bank noted that Balfour Beatty shares traded on 17.9x FY26 price-to-earnings ratio, 7.1x EBITDA and 8.9x EBIT, and said its upgraded price target reflected both improved fundamentals and clearer medium‑term growth pathways.
Reporting by Iain Gilbert at Sharecast.com