Balfour Beatty stock: A good buy after guidance boost

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Balfour Beatty (LON: BBY) stock price cruised close to its highest level in more than a decade after the firm published a positive guidance. It rose to a high of 341p, which was about 65% above the lowest level this year. That recovery has pushed the infrastructure giant’s market cap to more than 2 billion pounds. 

Ups guidance amid recession fears

Balfour Beatty is a leading UK infrastructure company that has capabilities in civil engineering, construction, highways management, and mechanical engineering. The firm works on large-scale developments in the UK and other countries. Some of its top projects are the Thames Tideway Tunnel, Manchester Engineering Campus, A63 Castle Street Scheme, and Funicular Viaduct Strengthening.

Therefore, in most cases, Balfour Beatty does well in periods when the UK’s economy is growing. This year, however, a series of large product deals have boosted the company’s performance. 

In a report on Thursday, Balfour Beatty said that its order book will be about 5% above its 2021 financial year. Its order book in 2021 was valued at over 16.1 billion pounds. Its revenue will be about 5% above its 2021’s 8.3 billion pound. Further, the company’s profit is expected to be above its previous guidance, with the average monthly net cash flow being 800 million pounds.

Balfour Beatty’s diversification makes it weather multiple storms better than other firms. For example, it has a growing market share in the United States. It recently won a contract to build a $700 million federal building in Maryland and a $400 million convention centre in Florida. Its American contracts are paid in US dollars, which is a positive for the firm since it reports its books in British pound.

Further, Balfour Beatty is a good rewarder of shareholders. It has returned over 385 million pounds to shareholders since 2021. It also intends to boost its returns in January.

Balfour Beatty stock forecast

BBY chart by TradingView

The Balfour Beatty share price has been in a strong bullish trend in the past few weeks. In this period, it has managed to move above all moving averages. The 200-day and 50-day moving averages formed a golden cross in June this year.

It has also formed what looks like a cup and handle pattern that is shown in black. In price action analysis, this pattern is usually bullish. Therefore, a move above the resistance at 346p will mean that bulls have prevailed, which will push it to the next level at 360p.

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