Hunting – its growth continues, while its shares look totally undervalued at 339p, brokers TP 600p

09.07.2025

This morning’s First Half Trading Update announced by Hunting (LON:HTG), the precision engineering group, showed a 16% increase in its year-on-year growth to EBITDA of some $69m.

The group’s order book is slightly ahead at around $450m ($439m) whilst it has a tender pipeline of some $1.1bn.

The Directors remain comfortable with full year EBITDA guidance of c.$135-$145m, in line with market expectations.

The group’s year-end total cash and bank position is expected to be in the $65m-$75m range.

CEO Jim Johnson stated that:

"Hunting has taken a significant step forward in the execution of its 2030 Strategy, with the completion of two acquisitions, which will accelerate growth in revenue and EBITDA to the end of the decade.

Both FES and OOR demonstrate strong margin profiles, well in excess of the Group's long-range stated target of 15%.

Our sales order book supports the robust outlook for the Group while our success within our Subsea product group in the Gulf of Mexico and North Sea confirms our strategy of pivoting our sales profile to longer cycle, more stable revenue opportunities.

The first half of 2025 has seen strong trading for the Group.

Hunting's robust cash generation and significant financial flexibility enables us to commence a Share Buyback and increase our targeted annual dividend distributions.

We also continue to actively monitor further bolt-on M&A opportunities."

The Business

Hunting is a global precision engineering group that provides precision-manufactured equipment and premium services, which add value for its customers.

The company, which was established way back in 1874, maintains a corporate office in Houston and is headquartered in London, whilst also having operations in China, India, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, the UAE and the USA.

It has five main operating product segments - OCTG; Perforating Systems; Subsea; Advanced Manufacturing; and Other Manufacturing.

Hunting is a specialist manufacturer of customised, high-value components typically for the oil & gas industry.

Its chief product lines are perforating guns & associated systems, tubular goods (OCTG) premium connections, subsea, and advanced manufacturing.

Almost all its businesses provide high-performance equipment, typically manufactured to tight tolerances using CNC machine tooling and to a mixture of Hunting and third-party specifications.

Its manufacturing footprint is around 50% in the United States, with the balance widely spread in Europe, Asia & the Middle East.

Buyers for its products include the oil service majors such as Schlumberger, Baker Hughes & Halliburton, with which it also competes, as well as oil companies directly and a wide range of customers in other industries.

These include geothermal and carbon capture, as well as aviation, defence, space, and other specialist capital equipment applications.

Its manufacturing footprint serves these customers worldwide, and hence activity in one region may be used for projects elsewhere in the world.

Analyst Views

Daniel Slater, analyst at Zeus Capital, rates the group’s shares as a Buy, with a 450p Target Price.

He stated that:

“Overall, this is a strong statement from Hunting, reassuring on full year guidance, showing good order book progress and the benefit of some of its business promotion and cost-cutting initiatives, and announcing a significant new shareholder returns programme, demonstrating management’s confidence in the forward delivery from the business.”

His estimates for the 2025 year are for $1,148m ($1,048m) revenues, $96.6m ($75.6m) adjusted pre-tax profits, with $0.39 ($0.31) per share in earnings and paying a dividend of $0.13 ($0.11) per share.

For 2026 he looks for $1,267m sales, $118.1m profits, $0.49 earnings and a $0.147 dividend.

Analyst Alex Brooks, at Canaccord Capital Markets, rates the group’s shares as a Buy, looking for them to rise to 600p in due course.

“We continue to see Hunting as materially undervalued, trading well below the multiples of directly comparable companies in the UK and US.”

The broker estimates sales to end-December of of $1,091m ($1,049m) with EBITDA of $140.0m ($126.3m), generating adjusted earnings of $0.41 ($0.31) per share and a dividend of $0.13 ($0.12).

For 2026 the estimates are for $1,250m sales, $180.0m EBITDA, $0.62 of earnings and a $0.15 dividend per share.

Analysts Toby Thorrington and Andy Edmond, at Equity Development, have a 347p a share ‘fair value’ on the group’s equity.

They note that:

“Hunting is hitting its marks strategically whilst also continuing to improve near term profitability.

H1’25 contained operational progress, M&A execution and an updated capital allocation programme to include faster dividend growth and prospective share buybacks.

Prevailing earnings multiples remain unstretched and the prospect of faster dividend growth adds further appeal in our view.”

In My View

Hunting Defence

This group’s shares are totally undervalued, despite this morning’s 12.5% rise to 339p.