Is Strabag (WBAG:STR) Undervalued After The HS2 JV Leadership Change?
Why Rohan O’Grady’s HS2 role matters for Strabag stock
Costain’s appointment of Rohan O’Grady to lead the Skanska Costain STRABAG joint venture on the London tunnels section of HS2 gives Strabag (WBAG:STR) fresh leadership focus on a complex, high value rail project.
The move puts an executive with more than two decades of experience in large infrastructure delivery at the center of a critical HS2 phase. This is where investors often start rethinking risk, execution quality, and how much of that is already reflected in Strabag’s share price.
Strabag’s €102.2 share price comes after a 20.09% 90 day share price return and a 26.96% year to date share price return. The 3 year total shareholder return of about 3x suggests long term holders have already seen very large gains, even as shorter term momentum has cooled slightly over the past month.
Compare Strabag’s HS2 exposure with other infrastructure focused plays by scanning our hand picked 43 power grid technology and infrastructure stocks that could also be leveraged to major long term projects.
After a run that turned a €102.2 share price into a roughly 3x total return over three years, is Strabag still mispriced, or has most of the upside already been taken?
Most Popular Narrative: 10% Undervalued
The most followed narrative on Strabag values the shares at €113.5 using a 7.9% discount rate, compared with the current €102.2 price. This frames the HS2 role within a story of modest undervaluation backed by a long pipeline of work.
Strabag's strong order backlog, which exceeded €25 billion for the first time, provides good visibility and stability for future revenue streams, suggesting a solid revenue outlook for the coming years. The company's successful acquisition of infrastructure and energy transition projects in Europe and the Americas indicates potential growth in revenue and could maintain or enhance profitability margins despite challenges in the residential construction market.
See why 14 investors see Strabag as 10% undervalued.
Result: Fair Value of €113.5 (UNDERVALUED)
Still, if public sector work were cut, or residential construction in Austria and Germany weakened further, the bullish Strabag narrative could quickly look stretched.
Find out about the key risks to this Strabag narrative.
Next Steps
If you are still mixed on the story so far, or feel pulled in both directions by Strabag’s risks and rewards, then go straight to the source and weigh the trade off yourself with the 3 key rewards and 2 important warning signs
Looking for more investment ideas beyond Strabag?
If Strabag has sharpened your focus on risk, price and long term projects, you can use that same lens to search for other potential opportunities before the market does.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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