• Strong Q2 Results: Q2 revenue rose 36% YoY, driven by strong client activity, and 7% above our estimate. Gross margin expanded 9 pp YoY to 34%, while EPS improved from ($0.012) to ($0.001), coming in 17% above our estimate.
  • Healthy Balance Sheet: Maintains a healthy cash position, while debt-to-capital remains broadly in line with the sector. We do not anticipate a need for new financing.
  • Favourable Oil Price Environment: Consensus oil price forecasts remain relatively flat since our previous report in March 2026, but well above 10-year averages, supporting a positive outlook for the oilfield services sector. E’s revenue historically tracks oil and gas prices, and sector CAPEX, with a 1% change in each historically corresponding to a ~1.2% change in revenue.
  • 2026 Outlook: Based on Q2 results and continued organic growth, we are raising our full-year revenue and EPS estimates, and continue to expect record revenue in 2026.
  • Shares Lag Despite Strong Fundamentals: E delivered 5% revenue growth in 2025 vs. 3% for the sector, while we project 21% revenue growth in 2026 vs. 12% for the sector. E’s shares are up 47% since our March 2026 report, when we highlighted the stock’s undervaluation, indicating the market is beginning to recognize its strong fundamentals. Despite this gain, E trades at a 25% discount to sector-average EV/Revenue and EV/EBITDA multiples, leaving room for further upside.

Price and Volume (1-year)

  YTD 12M
E 13% 12%
TSX 14% 30%
Sector* 43% 86%

* Evolution PowerX 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$ except commodity prices which are in US$.

E vs Larger Players

We benchmark E against a broad spectrum of oil and gas equipment and service providers, with MCAPs from $25M to ~$2B

E recorded 5% revenue growth in 2025, outperforming the sector average of 3%

We are projecting 21% revenue growth for E in 2026 vs 12% for the sector

E’s gross margins are in line with the sector average

Debt to capital is also in line

Source: FRC / S&P Capital IQ

Despite our strong 2026 outlook, E has gained just 12% YoY vs. 25% for the sector, suggesting its share price has yet to fully reflect its growth prospects

Financials 

Q2 revenue: +36% YoY on strong client activity, 7% above our estimate
Gross margin: +9 pp YoY to 34%, 2 pp above our estimate

*Sector: Oil & Gas Machinery Rental and Leasing

G&A: +4% YoY, 6% above our estimate
EPS: Improved from ($0.012) to ($0.001), 17% above our estimate

Free cash flows: Declined despite higher EPS, due to working-capital timing, with no structural issues

Balance Sheet: Healthy cash position; debt-to-capital increased but remains in line with peers. We do not anticipate a need for new financing.

Source: FRC / Company

Oil & Gas Price Outlook 

Source: FRC/ Sproule / GLJ

Consensus oil price forecasts are relatively flat since our previous report, and remain well above 10-year averages, supporting 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, and CAPEX spending, has led to a 1.2% change in E's revenue 

FRC Projections and Valuation 

Based on Q2 results, we are raising our full-year revenue and EPS estimates

Source: FRC

As a result, our DCF valuation increased from $2.73 to $2.85/share

Source: FRC / S&P Capital IQ

We have added independent power producers (IPPs) to our peer group to reflect E’s growing power-generation focus
IPPs trade at ~2x the EV/Revenue and EV/EBITDA multiples of oilfield services peers
Combined with our higher revenue and EBITDA forecasts, this increases our comparables valuation from $1.47 to $2.35/share

Source: FRC

Based on our updated DCF and comparables valuation models, our fair value increased from $2.10 to $2.60/share

We are reiterating our BUY rating, and adjusting our fair value estimate from $2.10 to $2.60/share. The company’s shift toward natural-gas power generation is gaining traction, with repeat customer deployments, and strong Q2 results supporting our higher forecasts. We believe the transition could also drive a valuation re-rating, as power producers trade at significantly higher multiples than oilfield services companies.

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