At UK£3.92, Is It Time To Put Galliford Try Holdings plc (LON:GFRD) On Your Watch List?

As the construction sector continues to evolve, investors are keeping a close eye on Galliford Try Holdings plc (LON:GFRD), a UK-based construction business with a market capitalization of GBP 390.39 million. With its shares trading at UK£3.92, the question on many investors' minds is whether it's time to add Galliford Try to their watch list. To answer this question, let's delve into the company's financial performance, valuation, and future prospects.



Galliford Try's financial performance has been robust, with revenue growing by 27.2% and pre-exceptional profit before tax increasing by 39.7% in the year ended June 2024 compared to the previous year. The company's divisional operating margin also improved by 13 basis points to 2.5%. These strong results have translated into a 47.6% increase in the final dividend payment, with a total dividend for the financial year of 15.5p, up from 10.5p in the previous year.



In terms of valuation, Galliford Try's current P/E ratio of 11.30 is lower than its historical average and the industry average of 15.31. This suggests that the company's shares may be undervalued relative to its earnings potential. Additionally, Galliford Try's dividend yield of 3.95% is higher than the industry average of 2.5%, indicating that the company is returning more capital to shareholders through dividends than some of its peers.



Looking ahead, Galliford Try's confidence in its outlook is supported by a high-quality order book of GBP 3.8 billion, with 92% of FY25 revenue already secured. The company's well-capitalized debt-free balance sheet, with GBP 227.0 million in cash, also positions it well for future growth and potential acquisitions.



However, it's essential to consider the risks associated with investing in Galliford Try. The construction sector is cyclical, and the company's performance may be affected by economic conditions and changes in government spending. Additionally, Galliford Try's dividend growth rate of -31.11% suggests that the company has been reinvesting in its business to drive growth, which may impact its ability to maintain or increase its dividend payout in the future.

In conclusion, Galliford Try Holdings plc's strong financial performance, attractive valuation, and confident outlook make it an interesting addition to any investor's watch list. However, investors should carefully consider the company's risks and the potential impact of economic conditions on its future performance before making a decision to invest. As always, it's crucial to conduct thorough research and seek professional advice before making any investment decisions.