Keller Group Posted Record H1 and the Stock Slipped - Again

Keller Group posted record first-half results on Thursday - 11% revenue growth, 17% profit growth, a margin expansion, a record order book, and a £100m buyback program - and the stock slipped. The headline in some corners claimed a GAAP EPS of 120.1p. That number was actually underlying diluted EPS; statutory EPS was 113.6p. It's the kind of misread you see when the narrative is set before the numbers are checked. But the real story isn't the accounting label - it's that a company delivering this level of growth, margin expansion, and balance sheet cleanup is still trading at a forward P/E of 13.3x. That's the disconnect.

The market keeps looking at Keller through the lens of a UK construction contractor and pricing it like one. The story has shifted into something else.

1. North America is the engine, and data centers are the new fuel.

Revenue in North America rose 16.7% at constant currency to £984.4m, with underlying operating profit up 17.7% to £93.8m. The division held a 9.5% margin. The growth driver is no longer just infrastructure. Data centers now represent 9% of Keller's group revenue, up from 3% a year ago. The company completed more data-center projects in the first half of 2026 than during all of 2025. Excluding Suncoast (Keller's ground-improvement unit in Florida), data centers accounted for more than 15% of U.S. revenue year to date. The North American order book sits at £1.37bn, with just over £100m of data-center work in hand. When you look at projections of $650bn in total data-center spending, Keller's share is still early-stage.

2. The I-40 contract is multi-year visibility, not a one-off bump.

Keller highlighted its I-40 highway remediation contract - the reconstruction of a highway from the Tennessee state line to North Carolina after Hurricane Helene damage in 2024 - as the largest in company history. The CFO laid out the timeline plainly: the project will contribute revenue in 2026, 2027, and 2028. That's three years of contracted work from a single contract. The total group order book is £1.9bn, up from £1.6bn in the prior-year period. For a company where roughly two-thirds of the opening order book converts within six months (outside of multi-year projects like I-40), that order book is the leading indicator of revenue, not an aspiration.

3. EMEA turned the corner; APAC grew despite weather.

Europe, the Middle East, and Africa saw revenue decline 5.2% at constant currency to £396.1m, but that's not the story. Underlying operating profit in EMEA rose 28% to £19.2m, with the margin expanding to 4.8% from 3.6%. The improvement came from stronger volumes and margins in the UAE and the absence of a low-margin NEOM contract that dragged on 2025 comparisons. The EMEA order book grew 16.5% to £396.7m. Asia-Pacific revenue surged 22.8% to £227.5m, driven by mining-related civil works in Austral. Profit was broadly flat at £13.8m, weighed down by pricing pressure and severe weather in Queensland, but the revenue trajectory is the signal.

4. Cash generation cleaned up the balance sheet, then management put the surplus to work.

Net debt fell 74% to £15.9m on a covenant basis, with leverage at 0.1x - well below Keller's own 0.5x–1.5x target range. Free cash flow before interest and tax was £43.0m, down from £51.6m in H1 2025, but the decline isn't alarming: it's a seasonal construction contractor running a higher share of project front-loading and funding a £100m buyback. The company launched the buyback on March 30 and has completed roughly £35m of it in under five months. The interim dividend was raised 57% to 28.7p, in line with the new enhanced dividend policy (2.5x–3.5x earnings cover) adopted at full-year results in March.

5. The break condition is the Capital Markets Day in October.

Keller will hold a Capital Markets Day in London on October 14, 2026. For a company that has just confirmed its record order book, data-center ramp, multi-year I-40 visibility, and a refreshed capital allocation framework, the CMD is the event where management is expected to lay out the full-year 2026 and multi-year outlook. Current company-compiled consensus from seven analysts is revenue of £3,337m and underlying operating profit of £242m for FY2026 - and management said it's confident in delivering in line with "upgraded market expectations." If the CMD elevates those estimates or extends the data-center runway, the re-rating mechanism has a path.

The valuation still doesn't match the growth.

Keller trades at a forward P/E of 13.3x on consensus FY2026 estimates. The stock has more than doubled from its 2026 low of 1,238p and is up roughly 81% year-to-date, so the market has done work. But the forward multiple hasn't caught up. You don't get 11% CER revenue growth, margin expansion, a 9% data-center revenue share that was 3% a year ago, a record order book, near-net-zero debt, a buyback, and a 57% dividend hike - and then trade at 13x forward earnings - unless the market is still pricing this as a boring geotechnical contractor rather than a data-center infrastructure play in its early innings.

What could break the setup?

North American residential construction remains a weak point, with major multifamily developments in Miami delayed and that subsector roughly down one-third in revenue. The Iran war disrupted Middle East operations briefly in March. If a broader construction slowdown hits or data-center spending decelerates, the order book conversion rate and margin trajectory would be the first things to test. But those are visible risks, not hidden ones. The order book is public. The data-center pipeline is disclosed. The buyback puts management's cash to work at current levels.

At 13.3x forward earnings on a business growing profit at 17% and adding data-center exposure that went from 3% to 9% in a single year, the stock doesn't price in the shift in what Keller actually is. The Capital Markets Day in October is the catalyst that could close the gap. The math is already ahead of the price.