# Babcock International Group (BAB.LSE)

Canonical: https://gigainvestors.com/s/BAB.LSE

Analysis as of: 2026-10-16T07:37:02.015Z. Financial observations: FY1997–FY2026.

Listing currency: GBX. Reporting currency: GBP.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: GBX 928.40 per share; close as of 2026-10-15.

Estimated value: low GBX 374.87 per share, central GBX 408.63 per share, high GBX 453.58 per share. Buy at or below the central value GBX 408.63 per share. Valuation as of 2026-10-16T07:37:02.015Z; scenarios are not confidence intervals.

Expected annual return: 5.4% at the stated quote. About 5.4% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; GB 10-year bond 5.4% + 4 points).

## Checklist

### understandable: fail

- 4 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 4

- Years with a net loss: 3

- Operating margin variation: 0.52×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.08×

- FY2018: 0.08×

- FY2019: 0.04×

- FY2020: 0.04×

- FY2021: -0.01×

- FY2022: 0.06×

- FY2023: 0.03×

- FY2024: 0.06×

- FY2025: 0.08×

- FY2026: 0.06×

### moat: fail

- ROIC worst years below threshold (more than 1 bad year allowed)

- Recent gross margin fell 7.5pp below the typical margin (limit 4pp)

- ROIC, median of available years: 23.0%

- ROIC, second-lowest year: 8.0%

- Typical minus recent gross margin: 7.5 pp

- Typical gross margin (annual median): 13.4%

- Recent gross margin (lower of latest and 3-year median): 5.9%

- Years with nonpositive capital: 0

- Capital spending / revenue: 3.6%

- ROIC including acquisitions, ten-year median: 6.5%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 21.6%

- FY2018: 20.8%

- FY2019: 10.9%

- FY2020: 8.0%

- FY2021: -6.7%

- FY2022: 24.4%

- FY2023: 89.5%

- FY2024: >100%

- FY2025: >100%

- FY2026: >100%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: 0.65×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: GBP 488M

- Net income, five-year total: GBP 753M

- Return on incremental invested capital: -156.4%

- Working capital / revenue, annual change: 0.5 pp

- Working capital / revenue, change between three-year averages: 3.6 pp

- Working capital / revenue, final three-year average: 12.6%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 0.47×

- FY2023: 0.68×

- FY2024: 0.56×

- FY2025: 0.78×

- FY2026: 0.71×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 20.8% vs 134.7%

- Per-share earnings: 0.62 to 0.42 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 0.0%

- Ordinary dilution, 5-year annual growth: -0.2%

- Market cap gain: GBP 1.4B

- Cumulative retained earnings: GBP -2.1B

- Diluted shares, 10-year annual growth: 0.0%

- Diluted shares, 5-year annual growth: -0.2%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: -4.8%

- Per-share value change: GBP -0.20

- Per-share value, starting three-year median: GBP 0.62

- Per-share value, ending three-year median: GBP 0.42

- Buybacks concentrated in cheaper years (correlation): -0.52

- Average buyback yield: 0.5%

- Buyback history: 8 years

- Debt-funded buybacks: No

- Acquisition spending: GBP 1.9B

- Cumulative net income, 10 years: GBP -320M

- ROIC, first three-year median: 20.8%

- ROIC, last three-year median: >100%

Chart: Earnings per share; fiscal year observations.

- FY2017: GBP 0.62

- FY2018: GBP 0.67

- FY2019: GBP 0.39

- FY2020: GBP -0.23

- FY2021: GBP -3.53

- FY2022: GBP 0.32

- FY2023: GBP -0.07

- FY2024: GBP 0.32

- FY2025: GBP 0.48

- FY2026: GBP 0.42

### accounting: pass

- Sloan accruals: -5.1%

- Receivables to sales index (DSRI): 1.14×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 4.2%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.96×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 1.49×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -1.3%

- FY2018: 0.3%

- FY2019: -3.0%

- FY2020: -5.8%

- FY2021: -49.2%

- FY2022: 2.5%

- FY2023: -9.2%

- FY2024: -4.2%

- FY2025: -1.7%

- FY2026: -5.1%

## Holders

## Price story

Down 35% since Jan 2026 · sales +7.2%

Story as of 2026-10-16T10:00:08.521Z; price observation 2026-10-15.

Price needs cash profits to grow 14.2% a year for ten years

- 2025-06-25: Babcock Earnings Rise on Higher U.K. Defense, Nuclear-Power Spending ([finance.yahoo.com](https://finance.yahoo.com/m/bdc9fa28-8e87-33b2-894d-d85962ee08e9/babcock-earnings-rise-on.html))

### Sales · FY2025–2026

sales +7.2%; source https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml; observed 2026-06-30.

- FY2017: GBP 4.5B 

- FY2018: GBP 4.7B 

- FY2019: GBP 4.5B 

- FY2020: GBP 4.4B 

- FY2021: GBP 4.0B 

- FY2022: GBP 4.1B 

- FY2023: GBP 4.4B 

- FY2024: GBP 4.4B 

- FY2025: GBP 4.8B 

- FY2026: GBP 5.2B 

### Gross margin · FY2026

gross margin 5.9%; source https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml; observed 2026-06-30.

- FY2017: 14.6% 

- FY2018: 14.8% 

- FY2019: 12.2% 

- FY2020: 11.6% 

- FY2021: 6.8% 

- FY2022: 21.6% 

- FY2023: 18.8% 

- FY2024: 5.6% 

- FY2026: 5.9% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in engineering & construction; annual sales are GBP 5.2 billion.

- Source: https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml (filed 2026-06-30); FY2026: revenue 5177700000; grossProfit 305100000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); BAB.LSE: Babcock International Group PLC, together with its subsidiaries, engages in the design, development, manufacture, and integration of specialist systems for aerospace, defense, and security in the United Kingdom, rest of Europe, Africa, North America, Australasia, and internationally. The company operates through four segments: Marine, Nuclear, Land, and Aviation. The company offers type 31 frigates, arrowhead 140, arrowhead 120, ARMOR force, project lurcher, jackal contract, ground deployed advanced mortar system, general logistics vehicle, Babcock's LGE, and armored land cruiser 300. It also provides weapons handling systems, autonomous and uncrewed aerial systems, and engineering and systems integration. In addition, the company is involved in the design, integration, and through-life support of various connected combat, support, and surveillance vehicles; integration of long-range fires, and command, control, communications, computers, intelligence, surveillance, targeting, acquisition and reconnaissance systems; provision of system engineering and general vehicle architecture services; and specialist vehicle conversions. Further, it provides equipment support, frontline support, and training services. Babcock International Group PLC was founded in 1891 and is based in London, the United Kingdom.

### Why customers stay

Margins ranged from 5.6% to 100% during 2024–26; it earns 23% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2024: grossProfit / revenue = 5.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2025: grossProfit / revenue = 100%.

- Source: https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml (filed 2026-06-30); FY2026: grossProfit / revenue = 5.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); 10-year return on capital observations [[2017,0.21648587645672163],[2018,0.20798761655467238],[2019,0.10890894819466249],[2020,0.08027620876638047],[2021,-0.06739110776186888],[2022,0.2444387360287415],[2023,0.8948987246811703],[2024,5.897078243405224],[2025,1.347133708226637],[2026,1.1771089819591758]]; median 0.23046230624273156. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Spends 6.9% of cash earnings on expansion; paid dividends in 8 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2017: growth capex 0; upkeep 175900000; owner earnings 338600000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2018: growth capex 0; upkeep 150400000; owner earnings 388300000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2019: growth capex 0; upkeep 194300000; owner earnings 195740000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2022: growth capex 2300000; upkeep 200900000; owner earnings 77380000. Growth capex / owner earnings = 0.029723442750064617.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2024: growth capex 0; upkeep 142400000; owner earnings 93000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); FY2025: growth capex 10600000; upkeep 117700000; owner earnings 192180000. Growth capex / owner earnings = 0.055156623998334896.

- Source: https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml (filed 2026-06-30); FY2026: growth capex 10400000; upkeep 139900000; owner earnings 149740000. Growth capex / owner earnings = 0.06945371978095365.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); Dividend observations: [[2017,132500000],[2018,143900000],[2019,150500000],[2020,152100000],[2021,152100000],[2022,0],[2023,0],[2024,8500000],[2025,26700000],[2026,34700000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml (filed 2026-06-30); FY2026: cash repurchases 155300000 GBP.

### Are managers owners

Insiders own 0.9% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); BAB.LSE SharesStats.PercentInsiders = 0.919 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 14.2% yearly over ten years; actual decline was 7.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-30); Ten-year compound average after fade. Initial solved rate 0.19229324204116638. Price 928.4; FX 100; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 0.6290152968595594 → FY2026 0.2962637606147661. Closing-price date 2026-10-15.

## Monthly share-price history (GBX per share)

- 2016-10: GBX 989.00 per share

- 2016-11: GBX 955.00 per share

- 2016-12: GBX 953.00 per share

- 2017-01: GBX 893.00 per share

- 2017-02: GBX 948.00 per share

- 2017-03: GBX 882.00 per share

- 2017-04: GBX 899.00 per share

- 2017-05: GBX 933.00 per share

- 2017-06: GBX 880.50 per share

- 2017-07: GBX 844.50 per share

- 2017-08: GBX 812.50 per share

- 2017-09: GBX 827.50 per share

- 2017-10: GBX 812.00 per share

- 2017-11: GBX 697.00 per share

- 2017-12: GBX 705.50 per share

- 2018-01: GBX 686.00 per share

- 2018-02: GBX 651.80 per share

- 2018-03: GBX 668.80 per share

- 2018-04: GBX 735.80 per share

- 2018-05: GBX 833.00 per share

- 2018-06: GBX 817.80 per share

- 2018-07: GBX 714.60 per share

- 2018-08: GBX 713.40 per share

- 2018-09: GBX 723.00 per share

- 2018-10: GBX 611.20 per share

- 2018-11: GBX 568.00 per share

- 2018-12: GBX 489.30 per share

- 2019-01: GBX 530.80 per share

- 2019-02: GBX 541.00 per share

- 2019-03: GBX 493.50 per share

- 2019-04: GBX 525.00 per share

- 2019-05: GBX 447.80 per share

- 2019-06: GBX 458.20 per share

- 2019-07: GBX 476.40 per share

- 2019-08: GBX 501.60 per share

- 2019-09: GBX 558.00 per share

- 2019-10: GBX 554.00 per share

- 2019-11: GBX 590.40 per share

- 2019-12: GBX 629.40 per share

- 2020-01: GBX 588.80 per share

- 2020-02: GBX 443.50 per share

- 2020-03: GBX 383.20 per share

- 2020-04: GBX 421.50 per share

- 2020-05: GBX 382.80 per share

- 2020-06: GBX 310.20 per share

- 2020-07: GBX 288.40 per share

- 2020-08: GBX 272.10 per share

- 2020-09: GBX 250.40 per share

- 2020-10: GBX 217.20 per share

- 2020-11: GBX 337.90 per share

- 2020-12: GBX 279.90 per share

- 2021-01: GBX 233.00 per share

- 2021-02: GBX 259.70 per share

- 2021-03: GBX 228.60 per share

- 2021-04: GBX 288.10 per share

- 2021-05: GBX 299.10 per share

- 2021-06: GBX 290.00 per share

- 2021-07: GBX 255.90 per share

- 2021-08: GBX 363.10 per share

- 2021-09: GBX 371.80 per share

- 2021-10: GBX 319.30 per share

- 2021-11: GBX 296.00 per share

- 2021-12: GBX 318.60 per share

- 2022-01: GBX 301.90 per share

- 2022-02: GBX 331.00 per share

- 2022-03: GBX 324.50 per share

- 2022-04: GBX 306.40 per share

- 2022-05: GBX 337.60 per share

- 2022-06: GBX 308.80 per share

- 2022-07: GBX 342.40 per share

- 2022-08: GBX 329.00 per share

- 2022-09: GBX 278.60 per share

- 2022-10: GBX 275.60 per share

- 2022-11: GBX 283.80 per share

- 2022-12: GBX 282.20 per share

- 2023-01: GBX 305.40 per share

- 2023-02: GBX 328.20 per share

- 2023-03: GBX 298.80 per share

- 2023-04: GBX 317.40 per share

- 2023-05: GBX 308.20 per share

- 2023-06: GBX 282.60 per share

- 2023-07: GBX 374.40 per share

- 2023-08: GBX 386.40 per share

- 2023-09: GBX 413.40 per share

- 2023-10: GBX 390.80 per share

- 2023-11: GBX 394.80 per share

- 2023-12: GBX 395.00 per share

- 2024-01: GBX 452.60 per share

- 2024-02: GBX 489.80 per share

- 2024-03: GBX 520.00 per share

- 2024-04: GBX 507.50 per share

- 2024-05: GBX 565.50 per share

- 2024-06: GBX 522.00 per share

- 2024-07: GBX 531.00 per share

- 2024-08: GBX 524.00 per share

- 2024-09: GBX 472.60 per share

- 2024-10: GBX 472.00 per share

- 2024-11: GBX 513.50 per share

- 2024-12: GBX 500.50 per share

- 2025-01: GBX 538.00 per share

- 2025-02: GBX 670.50 per share

- 2025-03: GBX 724.00 per share

- 2025-04: GBX 804.00 per share

- 2025-05: GBX 936.00 per share

- 2025-06: GBX 1,148.00 per share

- 2025-07: GBX 1,039.00 per share

- 2025-08: GBX 1,016.00 per share

- 2025-09: GBX 1,330.00 per share

- 2025-10: GBX 1,213.00 per share

- 2025-11: GBX 1,133.00 per share

- 2025-12: GBX 1,243.00 per share

- 2026-01: GBX 1,435.00 per share

- 2026-02: GBX 1,352.00 per share

- 2026-03: GBX 1,158.00 per share

- 2026-04: GBX 1,103.50 per share

- 2026-05: GBX 1,096.50 per share

- 2026-06: GBX 951.80 per share

- 2026-07: GBX 1,121.00 per share

- 2026-08: GBX 1,056.50 per share

- 2026-09: GBX 987.00 per share

- 2026-10: GBX 928.40 per share

## Annual estimated value (GBX per share)

- FY2017: low GBX 810.44 per share, central GBX 1,014.08 per share, high GBX 1,180.60 per share

- FY2018: low GBX 827.00 per share, central GBX 984.76 per share, high GBX 1,140.62 per share

- FY2019: low GBX 772.77 per share, central GBX 894.65 per share, high GBX 1,034.36 per share

- FY2020: low GBX 1,082.31 per share, central GBX 1,180.34 per share, high GBX 1,310.84 per share

- FY2021: low GBX 534.01 per share, central GBX 585.16 per share, high GBX 653.25 per share

- FY2022: low GBX 375.91 per share, central GBX 398.72 per share, high GBX 429.09 per share

- FY2025: low GBX 302.12 per share, central GBX 328.96 per share, high GBX 364.67 per share

- FY2026: low GBX 363.10 per share, central GBX 395.81 per share, high GBX 439.35 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:42:52.115Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original ESEF filing](https://filings.xbrl.org/213800TSKOLX4EU6L377/2026-03-31/ESEF/GB/0/213800TSKOLX4EU6L377-2026-03-31/reports/213800TSKOLX4EU6L377-2026-03-31-T01.xhtml); period 2026-03-31, filed 2026-06-30.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.