Keller: the thesis arrives early

Seven weeks after an AGM statement that merely reaffirmed guidance, Keller has issued an unscheduled upgrade: full-year 2026 revenue and underlying operating profit are now expected to be materially ahead of market expectations (consensus £3,150m and £223m respectively). North America is doing the heavy lifting — materially outperforming, with data centre and infrastructure demand the standouts — and the order book sits at a record c.£1.9bn, bolstered by the recent I-40 highway award. The shares responded with a 22% jump to around 3,300p, an all-time high.

In UK market convention, “materially ahead” implies 10%+, so operating profit forecasts should migrate towards £245–255m and EPS towards 250p. That leaves the shares on roughly 13x upgraded earnings — no longer the single-digit multiple of my May write-up, but hardly demanding for a business executing like this.

For the thesis, today changes the maths more than the story. The shares have blown through my 2,600p central fair value and now sit at the top of my 2,800–3,300p bull case. The structural drivers — data centres, energy transition, infrastructure renewal — are converting into earnings exactly as hoped, just faster. The honest caveats remain: south Florida residential is softening, Australian foundations pricing is competitive, and construction cycles always end. As a holder, this is the pleasant problem of a thesis working too quickly. I won’t chase here, and position sizing now argues for trimming into strength(which I have done this morning at £31-32 range) — but with a £100m buyback running and an upgraded earnings base, I’m in no hurry to leave this investment. Still a top 5 holding