Babcock's rudderless ship

Babcock (BAB) provides critical engineering services across the marine, nuclear, land and aviation markets. Within these sectors, its primary focus is on defence activities, which accounted for more than half its revenue in the year to 31 March. The group’s biggest customer is the UK Ministry of Defence (MoD), and as its number two supplier behind BAE Systems (BA), Babcock does everything from military training to shipbuilding. But despite its defence proclivities, the group has struggled to shake the perception that it is a traditional outsourcer like Serco (SRP) as opposed to a defence contractor like QinetiQ (QQ.). This hasn’t been helped by a long track record of underperformance – its shares have gone from almost 1,300p in 2014 to just 235p now.