Should I buy Babcock International shares?
Babcock International (LSE: BAB) shares are cheap right now. The stock is trading on a price-to-earnings (P/E) ratio of 4x. It also generates a dividend yield of approximately 2.5%. For now, Ill be monitoring Babcock international shares closely. But I do think the stock is worth taking a closer look at. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential...  Company overview  Babcock International has four main business divisions. These include Marine, Nuclear, Land and Aviation. The FTSE 250 engineering services company provides training for defence forces from the navy to the airforce and the army. It also has trained pilots and medical staff who provide aerial emergency medical services as well as aerial search and rescue operations. Approximately 52% of its 2020 revenue was derived from the defence sector with the rest coming from the civil industry. And 69% of it sales were generated from the UK. New captain  As I mentioned, Babcock International shares are cheap right now. In January, the company released a trading update, saying that it was seeing a continuation of trends in the first half of the year with weakness in its civil aviation businesses and a negative impact from Covid-19. It also started a series of reviews in January. This included a review of its balance sheet and contract profitability. I think its worth adding here that that the new CEO, David Lockwood, joined the firm in September 2020. When theres a new captain of the ship, its inevitable that there will be a review of the business. But in my view, this isnt a bad thing at all. A fresh pair of eyes is sometimes what a company needs and judging by the Babcock share price, thats true in this case. Business update  The company provided investors with a business update in April, the announcement being made ahead of its full-year results in July to provide some early transparency on key issues. The main thing to note here is that the company will have to make significant write-offs and there will be a reduction in profitability. This business update was therefore a warning to investors of what lies ahead in the results report. It has said that its contract profitability and balance sheet review (or CPBS) has identified impairments and charges totalling approximately 1.7bn. Thats a huge amount and will clearly hit profits. But the company also said that the vast majority of the impact of the CPBS is one-off in nature and non-cash affecting. So its short-term pain for long-term gain, it seems. It has also stressed that it aims to return to strength without having to raise money through an equity issue. For now, net debt as a multiple of EBITDA is 2.5x. Thats on the high side for me. My view  I wouldnt buy Babcock International shares just yet. As tempting as the cheap valuation is, the company is yet to release its full-year results. Things arent looking great for the company. So Im waiting for all the bad news to be digested by the market. But the stock is certainly on my watch list. Under the leadership of the new CEO, things appear to be changing. And the various reviews are likely to be the start of a transformation. Ill also be looking out for further details on the companys next steps.