XPRO: Offshore Diversification And Market Challenges Will Shape Performance Ahead

Key Takeaways

• Strong global demand and energy security trends support Expro's growing backlog, market position, and forward revenue visibility in key offshore and international sectors.
  
• Technology advancement, portfolio diversification, and operational initiatives drive sustainable margin expansion, resilient revenue streams, and improved profitability versus competitors.
  
• Exposure to geopolitical, regulatory, and energy transition risks threatens revenue growth, margin stability, and long-term demand for offshore oilfield services.

Catalysts

Provides energy services in North and Latin America, Europe and Sub-Saharan Africa, the Middle East and North Africa, and the Asia-Pacific.

• Expro's robust order intake and expanding backlog are supported by ongoing growth in global energy demand, particularly in international and offshore markets, positioning the company for steady long-term revenue growth as multiyear deepwater and international projects progress.
  
• Increased geopolitical tensions and the global push for energy security and supply diversification are driving sustained investments in well construction, flow management, and related services where Expro holds leading technological positions, supporting higher forward revenue visibility and backlog.
  
• Accelerated development and deployment of advanced digital and automation technologies, such as remote operations and AI-driven tools, are enhancing operational efficiency and margin expansion, creating potential for further net margin and earnings improvements as adoption grows.
  
• Realization of synergies from recent M&A, continuous operational cost initiatives (Drive25), and a scalable integrated services portfolio are enabling sustainable EBITDA margin expansion and improved free cash flow generation, positioning Expro to outperform peers on profitability.
  
• Diversification into production optimization, well integrity, and technology-enabled brownfield services aligns with the industry's prolonged focus on asset integrity and operational efficiency, supporting more resilient recurring revenue streams and higher margin contributions.

Expro Group Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Expro Group Holdings's revenue will decrease by 0.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.3% today to 4.9% in 3 years time.
• Analysts expect earnings to reach $83.2 million (and earnings per share of $0.72) by about August 2028, up from $71.3 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 18.3x on those 2028 earnings, up from 17.6x today. This future PE is greater than the current PE for the US Energy Services industry at 13.5x.
• Analysts expect the number of shares outstanding to decline by 4.51% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.72%, as per the Simply Wall St company report.

Expro Group Holdings Future Earnings Per Share Growth

Risks

• The company's heavy reliance on international and offshore oil and gas projects exposes it to heightened geopolitical, regulatory, and operational risks in volatile regions, which could drive up costs, disrupt operations, and negatively impact net margins and earnings over time.
  
• Long-term secular shifts toward decarbonization, net-zero targets, and increased global adoption of renewables threaten to structurally reduce demand for oilfield services, potentially shrinking Expro's addressable market and eroding future revenue growth.
  
• Customer caution and a moderated pace of new deepwater and ultra-deepwater project approvals, combined with deferment in short-cycle (OpEx-related) activity, indicate potential stagnation or contraction in upstream spending, which could constrain revenue growth and pressure earnings.
  
• High customer concentration with supermajors and national oil companies (NOCs) means future revenues are vulnerable to contract renewals, pricing pressures, and shifting capital allocation as customers pursue energy transition strategies, impacting long-term revenue stability.
  
• Growing ESG and climate-related disclosure requirements, as well as stricter global environmental regulations and well abandonment liabilities, may lead to higher compliance and operational costs, resulting in downward pressure on net margins and profitability.

Valuation

• The analysts have a consensus price target of $12.2 for Expro Group Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $15.0, and the most bearish reporting a price target of just $10.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.7 billion, earnings will come to $83.2 million, and it would be trading on a PE ratio of 18.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of $10.84, the analyst price target of $12.2 is 11.1% 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.