Decarbonization And Efficiency Will Expand Global Consulting Markets

Key Takeaways

• Growth in renewables and stricter ESG regulations are expanding market opportunities and driving higher-margin, stable consulting demand.
  
• Operational efficiencies, acquisitions, and digital solutions are set to boost margins, geographic reach, and client retention.
  
• Heavy reliance on acquisitions, industry volatility, rising costs, intense competition, and workforce changes collectively threaten ABL Group's margin stability and consistency of financial performance.

Catalysts

An investment holding company, provides energy, and marine and engineering consultancy services to renewables, maritime, and oil and gas industries worldwide.

• The accelerating global shift toward renewables and decarbonization is expected to expand ABL Group's addressable market for consulting and engineering expertise, particularly as more offshore wind and low-carbon projects enter development phases; this trend is likely to be a significant forward driver of top-line revenue growth as market volatility subsides.
  
• Increasing regulatory complexity and heightened ESG requirements in energy and maritime sectors are anticipated to create recurring demand for ABL's technical due diligence and risk assurance services, which should support a more stable and higher-margin consulting revenue base, enhancing net margins over the medium to long term.
  
• The operational efficiency program being rolled out group-wide-including increased use of freelancers for flexibility in headcount, rationalization of offices, and targeted cost reductions-is set to materially improve EBIT and overall margins from 2026 onward as initial implementation costs drop out of the P&L.
  
• Continued pursuit of strategic acquisitions, such as Techconsult and Proper Marine, is expanding geographic reach and service capabilities, positioning ABL to benefit from cross-selling and large project wins, likely resulting in both revenue uplift and improved scale-driven cost efficiencies over time.
  
• ABL's focus on developing proprietary digital solutions and technology platforms (a response to industry digitalization) is expected to enhance client retention and pricing power, supporting future earnings quality and potential margin expansion as digital adoption accelerates across its core markets.

ABL Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming ABL Group's revenue will grow by 9.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.4% today to 6.2% in 3 years time.
• Analysts expect earnings to reach $28.4 million (and earnings per share of $0.13) by about September 2028, up from $-1.6 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 6.8x on those 2028 earnings, up from -75.3x today. This future PE is greater than the current PE for the GB Energy Services industry at 6.6x.
• Analysts expect the number of shares outstanding to grow by 0.67% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.1%, as per the Simply Wall St company report.

ABL Group Future Earnings Per Share Growth

Risks

• The company's recent revenue growth is heavily dependent on acquisitions rather than significant organic growth, while organic growth is reported as being only in line with inflation; this reliance on M&A could expose ABL Group to integration risks, dilution of margins, or the risk that attractive acquisition targets become scarce, potentially impacting long-term revenue growth and net earnings.
  
• Management repeatedly describes ongoing volatility and uncertainty in both the oil & gas and renewables markets; prolonged industry volatility, especially the "very, very rocky" renewables sector and declining E&P spend into 2026 and 2027, threatens project pipelines and could drive inconsistent or declining revenues and EBIT.
  
• Despite efficiency initiatives, rising operating costs (up 41% year-on-year, outpacing revenue growth) and persistent margin pressures, especially in lower-margin acquired businesses, suggest that sustainable margin improvement is not yet secured; continued cost inflation, low-margin resourcing activities, or difficulty executing on efficiency programs may erode net margins and earnings quality.
  
• Competitive intensity remains high, with "a lot of people are fighting for the same jobs"; intensifying fee pressure and a hardening market could further compress margins, while limited differentiation raises the risk of market share loss or need for price concessions, negatively impacting future revenues and margins.
  
• The business's heavy reliance on human capital (with 33% of headcount now freelancers and further headcount reductions planned for underutilized segments) may challenge execution quality, scalability, and organizational knowledge retention, thereby heightening operational risk and increasing the likelihood of inconsistent financial performance, particularly at times of market stress.

Valuation

• The analysts have a consensus price target of NOK11.485 for ABL Group based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $456.2 million, earnings will come to $28.4 million, and it would be trading on a PE ratio of 6.8x, assuming you use a discount rate of 8.1%.
• Given the current share price of NOK9.0, the analyst price target of NOK11.48 is 21.6% 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.