• Oil & Gas CAPEX: North American sector CAPEX is down ~4% this year due to lower oil prices, and elevated economic and geopolitical risks. With consensus forecasts projecting an oil price recovery in 2026, lower interest rates, and modest GDP growth, CAPEX is projected to rise 5–7% in 2026, which should meaningfully benefit E.
  • Valuation: E’s forward EV/Revenue and EV/EBITDA are 35% below sector averages, highlighting potential relative value.

Price and Volume (1-year)

* Enterprise Group has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$ unless otherwise specified.

Enterprise vs Larger Players 

We forecast E’s 2025 revenue growth to match the sector average and note its comparable margins, lower debt, and favorable EV/Revenue and EV/EBITDA multiples

Source: FRC / S&P Capital IQ

Despite this, the stock has lagged peers (-28% YoY vs. +16% YoY) without clear justification, highlighting potential upside

Financials

Q3 revenue rose 35% YoY vs. (16%) in H1, in line with our estimate

Gross margins expanded 5 pp YoY to 42%, though still below our 45% forecast

*Sector: Oil & Gas Machinery Rental and Leasing

 G&A expenses were flat YoY (H1: +20%) and 9% below our estimate 

Following the Q2 FlexEnergy acquisition, forecasting EPS remains somewhat challenging without more clarity on stabilized G&A expenses, and gross margins

EPS turned positive but came in 10% below our estimate, driven by lower gross margins

CAPEX surged 141% to $32M, driven primarily by the FlexEnergy acquisition in Q2

Source: FRC / Company

Debt/capital increased QoQ (from 23% to 29%) but remained below the sector average of 33%

Can raise up to $10M from in-the-money options and warrants 

Oil & Gas Price Outlook 

Source: FRC/Sproule/GLJ

Consensus oil price forecasts (near and long-term) are well above historic averages of US$70/bbl oil and $2.6/mmbtu gas), implying a positive outlook for the oilfield services sector 

Source: FRC/Various

E's revenue generally tracks changes in oil and gas prices, and sector CAPEX spending

Historically, a 1.0% change in oil and gas prices has led to a 1.9% change in E's revenue

FRC Projections and Valuation 

With Q3 gross margins below expectations, we are lowering our EPS forecasts

Source: FRC

As a result, our DCF valuation fell from $3.04 to $2.89/share

Source: FRC / S&P Capital IQ 

Sector multiples are up 11% since our previous report in August

Our fair value decreased from $2.42 to $2.38/share, driven by lower EBITDA and EPS forecasts, partially offset by higher sector multiples

We are reiterating our BUY rating, and adjusting our fair value estimate from $2.42 to $2.38/share (the average of our DCF and comparables valuations). E delivered strong Q3 revenue growth, up 35% YoY, though EPS came in 10% below expectations due to lower gross margins. The company’s balance sheet is solid, with debt below the sector average, yet its share price has lagged peers for no justifiable reason. With North American oil and gas CAPEX projected to rise 5–7% in 2026, we believe E is well-positioned to benefit.

Risks

We believe the company is exposed to the following key risks (not exhaustive):

  • The oil/gas field services market is highly dependent on oil and gas prices
  • Operates in a competitive space
  • Revenue and growth are tied to sector CAPEX levels
  • Exposed to geopolitical risks and regulatory changes
  • Balance sheet strength is critical for weathering industry downturns

Maintaining our risk rating of 3 (Average)

APPENDIX