Emeco Holdings (ASX:EHL) is expected to see earnings stability into fiscal 2027 despite a softer fiscal 2026 close driven by weather and operational disruptions, with balance sheet strength and utilization recovery supporting the outlook, Euroz Hartleys said in a Friday note.

The company has updated its fiscal 2026 guidance to operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of AU$290 million to AU$295 million, and operating earnings before interest and taxes (EBIT) of AU$145 million to AU$150 million.

Euroz Hartleys has revised its forecasts to reflect a softer close, now projecting fiscal 2026 EBITDA of AU$292.3 million and EBIT of AU$147.9 million, followed by fiscal 2027 EBITDA of AU$296.2 million and EBIT of AU$150.4 million.

The research firm said the revised outlook reflects challenges already priced in by the market, including wet weather, supply chain disruptions, fuel price uncertainty and delayed fleet redeployment, shifting investor focus to a recovery in fiscal 2027 and fiscal 2028.

The company expects fiscal 2027 earnings to broadly match fiscal 2026, with a stronger second half driven by improved equipment utilization, targeting surface fleet utilization of around 90% and underground utilization of about 80% by June 2027 through fleet redeployment.

The firm added that the company trades at just over two times enterprise value-to-EBITDA and 5.8 times fiscal 2026 earnings, with an estimated free cash flow yield of 21%, while maintaining the balance sheet flexibility to pursue consolidation opportunities.

Euroz Hartleys maintained a buy recommendation on Emeco Holdings with a price target of AU$1.44.

Emeco Holdings' shares gained 1% in recent Friday trade.