SERCO (SRP) – Business Services
| Price: 264p +4.8% | P/E: 16.3x |
| Market Cap: £2.6bn | Yield: 1.7% |
In its pre-close trading update, outsourcing firm Serco has forecast earnings for 2025 and 2026 slightly ahead of market expectations thanks to its burgeoning order book.
For this year, the group now sees underlying operating profit at £270 million, ahead of the consensus of £265 million, while for next year underlying profit is seen around £300 million against market forecasts of £285 million.
The main driver of the results is expected to be defence, which accounts for two thirds of this year’s £5.5 billion order intake.
Our View
Serco has transformed itself in recent years and is now the go-to partner for the Ministry of Defence and the US Department of Defence when it comes to support services.
The firm’s bid pipeline is at a new decade high driven by what it calls ‘critical front-line services in complex operating environments’ – say no more.
Even before upgrades, the shares look cheap on a long-term view on our work.
Read the press release here: https://www.serco.com/investors
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