Should I buy Babcock International (LSE:BAB) shares for my holdings? Let’s take a look at recent performance and news, as well as the Babcock share price journey recently in more detail to help me make a decision.
Babcock share price recently
As a quick reminder, Babcock is an international aerospace, defence, and security business. It operates across many divisions, offering it the advantage of diversification, which can boost performance. Some of these divisions include marine, naval, land, and aviation. It has a global footprint too, with operations throughout the world.
So what’s the current state of play with the Babcock share price? Well, as I write, the shares are trading for 320p. At this time last year, the shares were trading for 290p, which is a 10% increase over a 12-month period.
It is worth noting that Babcock shares have come under pressure in recent months due to macroeconomic issues (but more on that later).
To buy or not to buy?
So what are the pros and cons of me buying Babcock shares?
FOR: Aviation and particularly defence spending is a highly lucrative market. In fact, in 2021, defence spending surpassed the $2trn mark for the first time. Babcock has a good profile and presence throughout the world to capitalise on this. In addition to this, it has a diversified business model that should see it benefit from the current burgeoning marketplace. Furthermore, Babcock regularly completes acquisitions to enhance its offering and grow its business.
AGAINST: The Babcock share price is up across the past 12 months but the current economic picture could have a real impact on results and its share price moving forward. Macroeconomic headwinds such as a soaring inflation, the rising cost of materials, and supply chain issues are a real risk to Babcock’s progress.
FOR: At current levels, Babcock shares look good value for money on a price-to-earnings ratio of eight. With its current profile, presence, position in the marketplace, and growth appetite, the shares could be a steal right now.
AGAINST: Although the past is not a guarantee of the future, Babcock has unfortunately experienced accounting issues and had to restate incorrect results in the past. This is particularly worrying to me as a potential investor as this could have a direct impact on any returns I hope to make. A recent change in leadership coupled with a new streamlined business model with a renewed focus could mean this is a thing of the past.
What I’m doing now
At current levels, the Babcock share price looks attractive to me. In addition to this, the current marketplace for defence and aviation, Babcock’s profile, presence, and its growth prospects help me make my decision. I would add the shares to my holdings and hold them for the long term.
I believe the shares could continue on an upward trajectory. It is worth noting I am expecting some bumps in the road due to current macroeconomic issues. My investment strategy has always been to buy and hold for the long term, which should negate these issues as I believe they are shorter-term headwinds.