Global Offshore And Onshore Projects Will Secure Future Diversification

Key Takeaways

• Expansion into global energy and adjacent markets, plus proprietary technologies, is driving revenue diversification, margin growth, and broader end-market exposure.
  
• Strong financial discipline and strategic investments are enhancing cash flow, shareholder returns, and long-term earnings stability.
  
• Heavy reliance on oil and gas exposes earnings to sector decline, while limited diversification and competition threaten long-term revenue, margin stability, and international expansion success.

Catalysts

Manufactures components, technology systems, and precision parts worldwide.

• Accelerating investments in global offshore and onshore energy projects, especially in growth regions such as South America, the Middle East, India, and Asia-Pacific, are expanding the addressable markets for Hunting's Oil Country Tubular Goods (OCTG), subsea, and premium connection technologies; this underpins multi-year revenue growth and diversification of earnings away from more cyclical North American activity.
  
• The ongoing modernization and recovery in global oilfield services, combined with underinvestment in upstream capacity since 2015, is resulting in increased tender pipelines and order books for well construction and completion products-driving higher backlog visibility and supporting forward growth in revenues and margins.
  
• Increasing adoption of proprietary, high-margin technologies (such as advanced OCTG connections, subsea titanium stress joints, and engineered FPSO components following recent acquisitions) is enhancing Hunting's pricing power and supporting margin expansion, directly improving future gross and EBITDA margins.
  
• Expansion into adjacent high-growth energy verticals-including geothermal and (to a lesser extent) nuclear markets-leverages Hunting's engineering capabilities beyond traditional oil & gas, broadening the company's end-market exposure and providing incremental, less cyclical revenue streams that support long-term earnings growth.
  
• Strong balance sheet, ongoing cost restructuring and facility rationalization, and disciplined capital allocation (including announced share buybacks and growing dividends) are freeing up cash flow and improving return on capital, positioning Hunting to accelerate earnings per share and shareholder returns in the medium term.

Hunting Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hunting's revenue will grow by 2.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from -3.1% today to 11.1% in 3 years time.
• Analysts expect earnings to reach $130.3 million (and earnings per share of $0.52) by about September 2028, up from $-34.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.8x on those 2028 earnings, up from -20.5x today. This future PE is greater than the current PE for the GB Energy Services industry at 7.5x.
• Analysts expect the number of shares outstanding to grow by 0.29% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.96%, as per the Simply Wall St company report.

Hunting Future Earnings Per Share Growth

Risks

• The company remains highly exposed to cyclical oil & gas demand, explicitly acknowledging that financial performance is tightly linked to commodity prices and macro factors outside their control; accelerated global transition toward renewables and long-term secular decline in oil & gas demand could materially soften revenues and earnings over time.
  
• Despite progress in non-oil and gas businesses, diversification outside the traditional hydrocarbons sector is still at an early stage, with key initiatives (like carbon capture) showing limited traction-leaving long-term earnings growth and revenue stability at risk if the core oilfield business sees secular decline or increasing volatility.
  
• Ongoing industry consolidation and intense competition in core areas-signaled by references to major contract losses (like KOC tenders) and shifting competitive dynamics-could increase margin pressure and create revenue instability, especially as large oilfield service peers invest more aggressively in renewables and digitalization.
  
• Capital intensity for plant upgrades, facility closures, and restructuring remains sizable, and there is a risk that future M&A (or integration of recent acquisitions) may fail to deliver promised operational or margin synergies, potentially eroding net margins and free cash flow over the long term.
  
• Expansion into international and emerging markets (such as the Middle East, India, South America, and Africa) brings execution risk and exposure to regional political, regulatory, and economic volatility, which could impact revenue growth and hamper consistent earnings delivery.

Valuation

• The analysts have a consensus price target of £4.308 for Hunting based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £5.97, and the most bearish reporting a price target of just £3.29.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $130.3 million, and it would be trading on a PE ratio of 8.8x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of £3.29, the analyst price target of £4.31 is 23.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.