OMS Energy ($OMSE) Should Trade at 0.5 Times Enterprise Value in a Year’s Time – Investment Moats

It was pretty cheap (not always value) at that time of writing and I was trying to on and off see it’s earnings result and did not catch it. Until I realized they announced their result on 30th June.

OMSE was trading at $4.70 in my article. Today, It is trading at $4.20.

With 41.5 million outstanding shares, the current market capitalization is US$174.3 million.

I mentioned that OMSE does not have debt but in 1st Dec 2025 has $126 million in cash, including the $20-29 million raised during the IPO.

The cash just went up to $152 million. It has $5-6 million in lease liabilities.

This means that net of cash the Enterprise Value is only $22 to $27 million only. Even if you use 3% interest earn on that $152 mil, that is $4.5 million. That yields 20% based on Enterprise Value.

If OMSE drops another 12.5%, then OMSE is valued at the value of its cash.

Now as I read more, I realize that the management would sometimes need the cash to help build up inventory (aside from using accounts payables) so as to service certain region. This means that we should look at the cash… more as capacity to deliver revenue as well. But I doubt they will need the whole $152M. There is probably $135M that is built up.

Here’s OMSE Profit Statement

1. Full Year Earnings 2026: $33.8 mil
2. Full Year Earnings 2025: $47.0 mil

And here is their cash flow statement:

The income statement shows that there are some profit drop off, but relative speaking, if they do similar this year, OMSE would have more cash than its Enterprise Value next year.

Well its not so simple and if we read OMSE’s Transcript for the results, we will see the CEO adjusting our expectations.

Some color below.

Why the Revenue Dropped Off

Revenue in FY2026 is less than FY2025 because FY2025 caught an overlap of two things happening at once:

1. The tail end of OMS’s previous Aramco contract winding down plus
2. Ramp up of the new 10 year agreement starting.

Both inflated the revenue and FY 2026 does not have the overlap.

If we wish to be exact, specialty connectors and pipes, which is the segment closely tied to Saudi Arabia, fell from $143M to $96M

CEO guided revenue that “Assuming no further material geopolitical disruption, we would expect to perform modestly better than this year on the top line” — driven by Aramco call-off activity picking back up plus diversification markets. So: recovery expected, but modest, not a snapback to FY25 levels.

CEO Adjusts Our Expectations of Margins

There were practically no analysts covering the earnings but in a way, the CEO tried to moderate how we should model their future revenue and profits.

1. Margins: The normalized operating margin will be below FY2026’s 22.4%. This is because this years margin was flattered by a favorable mix, including high margin Saudi connector revenue. And they will be diversifying into lower margin markets.
2. SG&A: Expected to normalized to $11M down from$12.4M as the one-time IPO costs rolled off.
3. Free cash flow: Do not model FY206 FCF as a run rate because this year benefit from a one-off $15.4M inventory drawdown that will be reversed in FY2027. They would wish to build the inventory back to the $20-25M range so the FCF will look poor.
4. Their priority is to reinvest the huge cash into the business through certifications, in-region capacity, potential Pakistan/UAE local presence.

Epilogue – What I Think

We have a short 1 year of OMSE’s listing history to work with and at this point, I felt that OMS just want a more public profile, which may help with the operating side of the business.

They probably have a significant client concentration with that 10-year Saudi Aramco contract. The rest of the contracts are likely less lucrative. It is also that the revenue from that contract is not consistent and relies on lumpy “Call-off Orders”, which are purchase orders issued under the master agreement.

A longer term sustainable goal may be to build a better public profile and grow more customers.

OMS is like the steel stockist in the past. If you rely on just a couple of customers that are significant to your revenue, you feel safe now but what if the base rate is that the clients could go away?

It is the same concept that if you rely on 2 stocks in your portfolio for 80% of your retirement income, what if the base rate is that companies usually fail or mean revert?

If we use a lower operating margin of 18% instead of 22%, OMSE’s FY2027 profit may be $25M.

If the operating margin is 15% instead, then OMSE’s FY2027 profit may be $12M.

Both are decreases and the stock market will not look favorably. However even adjusting for potential of building back inventory, I suspect there will still be $15M to $20M in FCF. It’s a FCF drop off but will still be that.

Which means if we hold or buy OMSE today, most likely the company will be almost at FY2027’s Enterprise Value.

That is cheap.

What we get for free is this oil and gas services operating business.

Do Like Me on Facebook. I share some tidbits that are not on the blog post there often. You can also choose to subscribe to my content via the email below.

If you’re thinking of opening an Interactive Brokers account, my referral link is here.

As the new account holder, you’ll receive USD 1 in IBKR stock for every USD 100 you deposit, up to USD 1,000 in shares — so a USD 10,000 deposit gets you USD 100 in IBKR stock, and the bonus is capped at USD 1,000 for deposits of USD 100,000 or more. A few other things to know: the minimum deposit to qualify is USD 10,000, done within 30 days of opening, and the bonus shares are locked up for one year from the award date. The promotion is currently active, and using the link costs you nothing extra. On a separate note, if you haven’t already, it’s worth taking a look at how IBKR’s share price has performed over the past five years — the stock you receive as a bonus isn’t just a token; it’s a stake in a company that has done quite well for its shareholders.

I break down my resources according to these topics:

1. All my personal notes about how my philosophy behind my own money and how I manage it.
2. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
3. Active Investing – For active stock investors. My deeper thoughts from my stock investing experience
4. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
5. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
6. Free Stock Portfolio Tracking Google Sheets that many love
7. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
8. Providend – Where I work and do research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.

Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory Firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.

You can view Kyith’s current portfolio here, which uses his Free Google Stock Portfolio Tracker.

His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

You can read more about Kyith here.