At roughly 8 times this year’s EBITDA, with high double-digit growth returning and high insider ownership, Enterprise Group (E.TO) is one of the most misunderstood setups in Canadian energy services. It does something simple, renting equipment and natural gas turbines to oil and gas producers in Western Canada on strong unit economics, riding the diesel-to-gas shift with the Canadian LNG build as the tailwind.
The market once paid a compounder multiple for it as it captured a fraction of its addressable market and was able to grow by reinvesting at high returns on capital. Then 2025 happened: capex went in, revenue came out flat, and the share price halved. The real story was that a top-three client had paused for an M&A transaction, temporary, and it is back in 2026 alongside new tier-one contracts the company had quietly onboarded. Management only explained why the figures were flat well after the market lost interest, and they did so in interviews, not in a press release.
Here is the variant view. The market looks at a company that nearly doubled its turbine fleet (which was supposed to be the growth side of the business) and still printed flat revenue and concludes the growth story is dead, so it prices Enterprise like a low-growth oilfield rental business at roughly 8 times 26E earnings. We think that mistakes a delay to the thesis for a permanent state, and in the coming quarters the numbers should finally break the negative narrative, a classic J-curve effect where the heavy lifting was done the previous year and in the coming years we will see the benefits of it.
The company is now focused on the oil and gas industry as the opportunity there is large right now and they are finally getting strong traction, but they will be expanding in the future into mining and datacenter power solutions, also offering power solutions to critical infrastructure like hospitals that need reliable electricity generation, something that is getting harder to secure on an already very stressed grid, so in the long term the company could achieve a multiple rerating from this change in use and end market.
The upside comes two ways. First, the multiple catches up to the earnings we already expect: put a 12 to 14 times multiple, conservative for a double-digit grower with these margins, on our ~C$18M of 2026 EBITDA and the stock is worth roughly C$2.50 to C$2.90, about 50 to 75 percent above today’s C$1.67. Second, the earnings catch up to the fleet: as utilization normalizes toward the C$55-60M of revenue the current fleet can support in 2027, EBITDA runs to about C$22M, and the same multiple puts the stock near C$3.00 to C$3.60, up 80 to 115 percent, before any credit for the optionality of entering new markets. The downside is well protected, with a book value at C$1.1 and low growth expectations baked in.
I have been following the situation for over a year, talking to management and investors every quarter, understanding what happened in the business that the financials did not tell, this analysis includes 3 recorded management calls. Q1 finally showed some growth as the client that was absent in 2025 came back, but I expect growth to be even higher into the coming quarters, as management noted that new clients have finally started to ramp up spending. The recent engine orders also give us the confidence that this is in fact happening and that we will see strong growth into the coming quarters (we will discuss why this is such a strong signal later). Q2 might not show full inflection, but due to the very weak comp from the previous year I believe the company will be able to show very strong growth year over year, and that should act as a catalyst, followed by more strong quarters and strong growth expectations into 2027. For all of these reasons the fund I advise holds Enterprise Group as its largest position right now.
So let’s start to get into the details of the thesis.
1. The Canadian gas supercycle
It is always great to own a cheap name, but it is even better to own a cheap one with strong macro tailwinds behind it, and this is the case with Enterprise Group. US electricity demand is projected to grow 35 to 50 percent between 2024 and 2040, the largest ten-year demand increase in the country’s history, driven by manufacturing reshoring, data centers (roughly 100 GW of AI infrastructure growth this decade, over US$600B of hyperscaler capex in 2026), and electrification. Natural gas is the cheapest and fastest-to-build answer to that demand.
North America’s power demand is inflecting higher, with data centers and electrification as primary drivers.
Canada is uniquely placed to supply it. Western Canada holds over 1,100 Tcf of remaining marketable gas, more than 160 years at current production, and the country is finally building the export capacity to sell it. LNG Canada in Kitimat is doubling from 14 to 28 Mtpa, with Train 2 in operation as of early December 2025, and Ksi Lisims (12 Mtpa), Woodfibre (2 Mtpa) and Cedar (3 Mtpa) add more than 31 Mtpa of new capacity behind it. Canada can reach Tokyo in half the shipping time of the US Gulf Coast, with no chokepoints like Hormuz or the Panama Canal. This will drive investment into natural gas in Canada, which is the market Enterprise serves.
Over C$60B of new Canadian LNG export projects announced, covering more than 25 percent of current gas production.
2. Business model
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