International Upstream Demand Will Unlock Secular Energy Trends

Key Takeaways

• Premium technology, operational efficiency, and diversification into high-growth regions and sectors position Hunting for outsized revenue and margin expansion over the long term.
  
• Strength in unconventional oil & gas plus growing exposure to non-oil sectors ensures resilience and multiple growth avenues amid structural global demand shifts.
  
• Dependence on traditional oil and gas, rising regulatory costs, and shifting investor sentiment threaten Hunting's margins, revenue stability, and access to capital.

Catalysts

Manufactures components, technology systems, and precision parts worldwide.

• Analyst consensus expects Hunting's move into international upstream and energy transition markets to bring steady growth, but this view likely underestimates how the company's premium technology and unique "virtual mill" model are letting it rapidly capture significant share in record-breaking projects-like the KOC contract and deepwater expansions-positioning revenue for a major step change as multi-billion dollar tender pipelines are converted through 2026 and beyond.
  
• While the consensus forecasts margin improvement from cost savings and restructuring, they miss the scale and permanence of these gains: with EMEA rationalization, ongoing operational efficiency, and a higher-margin mix from acquisitions like FES and OOR, net margins are on track for sustained outsized expansion, likely far above historical averages-even before new high-value FPSO and Subsea contracts ramp up.
  
• Hunting's deep exposure to unconventional oil & gas, especially U.S. shale, and its ability to outgrow rig counts via advanced connections and technology, gives it a structural advantage as global energy demand accelerates and data center-driven gas demand becomes a major demand vector-providing both revenue resilience and upside as energy security and consumption rise long term.
  
• The business is now embedded in fast-growing markets with secular tailwinds-India, Argentina, Brazil, and wider MENA/South Asia-where demographic and economic growth are set to drive sustained investment in oil, gas, and new energies, enabling Hunting to compound earnings by leveraging first-mover positions and diversified product lines in these underpenetrated regions.
  
• The company's rapidly growing share of non-oil & gas revenues-including ground-breaking exposure to nuclear, defense aviation, geothermal, and advanced manufacturing-coupled with a best-in-class balance sheet and active capital returns via buybacks and rising dividends, puts it in an unrivalled position to unlock both multiple expansion and accelerating long-term EPS growth.

Hunting Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Hunting compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Hunting's revenue will grow by 8.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -3.1% today to 9.5% in 3 years time.
• The bullish analysts expect earnings to reach $130.7 million (and earnings per share of $0.83) by about September 2028, up from $-34.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 12.2x on those 2028 earnings, up from -21.3x 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 7.93%, as per the Simply Wall St company report.

Hunting Future Earnings Per Share Growth

Risks

• The accelerating global transition toward decarbonization and renewables will likely reduce long-term demand for oilfield services, shrinking Hunting's addressable market and putting sustained pressure on future revenues.
  
• Despite efforts at diversification, the company's core business and the majority of its growth ambitions remain heavily tied to the traditional oil and gas sector, making Hunting vulnerable to underperformance on earnings and margins as industry capital shifts to lower-carbon alternatives.
  
• Regulatory trends toward tighter environmental legislation, such as increased emission taxes and carbon pricing, are expected to drive up operational costs and could compress net margins over time, particularly as much of Hunting's footprint is international and exposed to jurisdictions with varying policy risks.
  
• The text highlights the importance of large, lumpy projects and major contracts in regions like the Middle East and South America; this ongoing dependence on cyclical and mature markets exposes the company to pronounced swings in utilization rates, which could create periods of margin contraction and volatile earnings.
  
• As major investment funds and institutional capital continue to rotate away from fossil fuel-related businesses, Hunting may face persistent downward pressure on its valuation multiples and higher costs or dilution when raising capital, ultimately impacting shareholder returns and limiting financial flexibility.

Valuation

• The assumed bullish price target for Hunting is £5.97, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Hunting's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• 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 bullish analysts, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $130.7 million, and it would be trading on a PE ratio of 12.2x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of £3.42, the bullish analyst price target of £5.97 is 42.6% 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.