Babcock Share Price Forecast June 2021 – Time to Buy BAB Shares?
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Shares of Aerospace, defence and nuclear engineering services company Babcock International (LSE: BAB) are in the news these days for being one of the cheapest stocks available at the moment. With a price to earnings ratio of 4x and a dividend yield of 2.5%(approx.), many investors are monitoring their shares closely. The big question remains, however, – is now a buying opportunity for BAB?
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Babcock Shares – Technical Analysis
Babcock International’s financial statement reveals a market capitalization of £1.481 billion and an enterprise value of £504.527 million. It also reveals a profit margin of -4.39% from the last revealed revenue of £4.44 billion. 52% of its revenue was from defence and UK customers accounted for 69% of its sales.
Ultimate Oscillator (7, 14, 28)(51.4), Williams Percent Range (14)(−51.0), Stochastic %K (14, 3, 3)(41.8), Commodity Channel Index (20)(−31.6) and some other oscillators are pointing towards neutral for BAB shares. On the flip side, Simple Moving Average (50)(298.4) and other MAs are pointing towards buying. BAB shares closed on June 23rd at £298 with an uptrend of +1.71%.
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Recent Developments
Babcock International consists of 4 business divisions dedicated to marine, aviation, land and nuclear. The company released a trading update in January this year which revealed a weakness in its civil aviation business due to the COVID-19 pandemic. The company’s new CEO David Lockwood, who joined back in September 2020 has initiated a series of reviews for its balance sheet and contract profitability.
Babcock International has also provided a business update back in April to shed some transparency on key areas. Some feel that the update serves as a warning for investors of impending asset write-offs in the future. The review of its contract profitability and balance sheet has identified £1.7 billion worth of impairments. The company has recently signed a tripartite memorandum of implementation in Odesa with the UK and Ukraine governments.
Should You Buy BAB Shares?
It may be tempting to buy BAB shares at the moment, especially considering the cheap valuation. However, the company hasn’t released its full-year results for 2020. All other pointers indicate that things aren’t right for the company at the moment. So the best thing for an investor to do is to wait for the bad news to be digested by the market before making a move.
You can certainly add the shares to your watchlist, as there are plenty of positive signs that its value will increase in the near future. The leadership of the new CEO is certainly the start of a better future for the company. The market will be patiently waiting for further details on the company’s next moves.
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