It's a busy week this week for first-half results, but it gives us a chance to examine shares that we might otherwise overlook. Here are three that have caught my eye today.
Shares in Costain Group(LSE: COST) shot up 5.2% this morning, to 367p, on the release of an upbeat set of figures. The construction and engineering firm reported a 27% rise in first-half revenue to £791.4m, with adjusted pre-tax profit up 24% to £14.1m. Adjusted EPS came in 24% up at 11.9p, and the first-half dividend was hiked 15% to 4.3p per share.
Chief executive Andrew Wyllie told us: "These are exciting times as billions of pounds are being spent upgrading and renewing the country's energy, water and transportation infrastructure," adding that the company is on course to meet its full-year expectations.
Current forecasts suggest a modest 6% rise in EPS, and I suspect that will be revised upwards now. But even at that level we're looking at a P/E multiple of 13, dropping to 11.5 on 2017 predictions. I've considered the construction and engineering sectors as oversold for some time now, and dividends yielding 3.5% to 4% convince me that Costain is a solid long-term buy.
Solid flooring sales
Floor coverings -- perhaps not the most glamorous of businesses. But it's enough to generate first-half revenue of £328.7m for Headlam Group(LSE: HEAD), leading to a 22% rise in pre-tax profit to £15.11m and a 23% boost in EPS to 14.4p. The interim dividend was lifted 12% to 6.7p.
Headlam has been raising its dividend strongly of late, and the 23.3p forecast for the full year would provide a 5% yield on today's 463p share price -- which is up 3.5% today. On a forward P/E of 13.7 now, the shares look superficially attractive, but Headlam does some of its business in continental Europe and we've just had that EU referendum thing...
But Brexit seems unlikely to cause any significant damage, as nearly 90% of Headlam's 2015 revenue came from the UK. The firm has had to up its prices to Europe in the wake of the sterling fall, but chief executive Tony Brewer told us that "price increases appear to have had no adverse impact on the level of residential revenues to date." Could be a nice buy, but for now I remain cautious.
In rude health
I've been watching NMC Health(LSE: NMC) for some time as its shares have soared by 84% over the past year, to 1,291p, and by 168% over two years. NMC, which operates a private healthcare network in the United Arab Emirates, has been a bit of a growth darling with annual EPS gains accelerating -- after a 23% rise last year, there's a further 46% on the cards for 2016.
First-half results today lend support to the growth story, encompassing a 47% rise in revenue to $578.3m, with EBITDA up 68% to $115.9m and adjusted EPS up 48% to 36.5 cents.
After such a rapid share price rise, we must be looking at an inflated growth valuation now, yes? Actually, no, NMC shares are on a fairly modest forward P/E of 23, dropping to 18 on 2017 forecasts of another 25% EPS growth. That gives us PEG ratios for the two years of 0.5 and 0.7 respectively, which look attractive. Growth candidates are always risky, but NMC looks like a firm possibility to me.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.