Emeco Holdings (ASX:EHL) has shown strong free cash flow generation and balance sheet emerging post recent refinancing arrangements, such that, heading into fiscal year 2027, the firm is potentially returning capital to shareholders or re-investing it, or both, said Euroz Hartleys in a Thursday note.

The research firm said that the company developed an asset management and technology services business over many years, which is critical to Emeco operations and supports the maintenance activities of the business.

At AU$1.30, Emeco is still trading under its net asset value, the note added. Euroz Hartleys' last valuation of the company was at AU$1.36 and said that it has likely increased further with the cash build since then.

Euroz Hartleys kept a buy rating on Emeco and raised its price target to AU$1.65 from AU$1.36.

The company's shares rose 1% in recent Friday trade.