AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
City analysts anticipate significant progress for FTSE 250 company Hunting (LSE:HTG), and recent momentum in its share price reflects this optimism.
The company's stock and overall business have shown strong recovery. The oil and gas sector experienced substantial volatility during and after the pandemic due to fluctuating commodity prices, notably oil. This instability had a detrimental effect on Hunting, which, like many, faced challenges as its clients struggled.
Hunting specializes in precision-manufactured equipment and premium services for the global oil and gas market, but its operations extend beyond this sector. The company also caters to the defence, power generation, space, and aviation industries.
Cyclicality Concerns Despite its diverse operations, the primary risk for shareholders remains the cyclical nature of Hunting's end markets. Current favorable conditions may not persist, and an economic downturn or global disruption could adversely impact the company's performance.
Nevertheless, the half-year results report released on August 29, 2024, highlights several positive developments. Revenue increased by 3% compared to the previous year, and adjusted diluted earnings per share surged by over 60%. Additionally, the order book grew by 32%, reaching record levels, bolstered by substantial orders from the Kuwait Oil Company.
Analysts project that normalized earnings could rise by nearly 40% in the coming year, building on the strong performance anticipated for 2024. Chief Executive Jim Johnson noted that the results underscore the robustness of offshore and international markets and reflect steady progress in the energy transition industry.
Technological Expansion In a separate announcement, Hunting revealed $60 million in orders from major North Sea operators for organic oil recovery contracts spanning five years. This indicates that operational momentum remains strong and suggests minimal immediate signs of cyclical weakness.
Johnson described the new orders as a “significant” advancement in organic oil recovery technology, highlighting confidence in Hunting’s ability to deliver innovative solutions for the energy sector.
Overall, Johnson's outlook on the company's future is positive. With the share price currently around 417p, trading at just over 10 times the forecasted earnings for the next year—compared to the FTSE All-Share index's forward P/E ratio of approximately 12.5—Hunting’s valuation appears reasonable. Given the strong operational momentum and relatively modest valuation, deeper examination of Hunting’s potential may be warranted for those interested in the oil, gas, and energy sectors.
