Hunting soars despite trade nerves

The comparison is probably unfair. Whereas Antofagasta requires a robust global economic outlook, Hunting can make do with a busy US shale industry. While Antofagasta is directly exposed to a sentiment-hit metal, Hunting just needs a West Texas Intermediate crude price that incentivises its clients’ drilling. At $70 (£54) a barrel, the group has what it needs.

What’s more, Hunting’s earnings smashed through forecasts, as we suggested they might at full-year results. Underlying earnings before interest, tax, depreciation and amortisation came in at $73m, 22 per cent ahead of consensus estimates and six times’ higher than the 2017 comparison, while net cash is up on December despite another $66m working capital outflow.

There are two reasons to ignore Hunting’s modest projections for Titan, its US onshore business, which accounts for almost half of group revenues and nearly all profits. By mid-2019, production capacity will have expanded significantly at both the Milford charge manufacturing facility and at the Pampa factory, which makes Titan’s strong-selling perforating guns and H-1 perforating systems. The hope is that Hunting can continue to reduce its cost base in the process, further boosting operating leverage.

A somewhat token return to the dividend list points to management comfort with constricted free cash flows, and the performance of Hunting’s Asia-Pacific, Canadian, European and Middle East businesses, all of which remain loss-making.

Barclays upgraded its forecasts on these numbers, and now expects adjusted EPS of 38¢ this year, rising to 51¢ in 2019 and 69¢ in 2020.