Zefiro Methane: Over 200% Upside Potential
We have previously reported several times on Zefiro Methane’s significant market opportunities. Now, for the first time, analysts have taken a closer look at this hidden gem and arrived at a clear assessment. GBC Research sees considerable growth potential, rates the stock a “Buy,” and sets a price target of USD 1.50. Currently, the stock—also traded on Tradegate in Germany—is trading at around CAD 0.60 on its home exchange in Canada.
Zefiro Methane is an environmental services company with a primary operational focus in the US. The company specializes in identifying, measuring, and reducing methane emissions from decommissioned, abandoned, or inadequately plugged oil and gas wells. Through its subsidiaries Plants & Goodwin and Appalachian Well Surveys, Zefiro covers key segments of the value chain—from methane measurements and technical planning to cementing, wireline, and transportation services, all the way to professional decommissioning and reclamation. The business model is complemented by the development and marketing of carbon credits. In this way, Zefiro serves both government-funded remediation programs and private energy producers and infrastructure operators.
According to GBC Research, the investment case is based on a remediation market that is expected to grow over the long term. In the US, there are millions of inadequately plugged orphaned oil and gas wells that can release methane over many years and must therefore be remediated. Zefiro has an integrated platform that offers key services from a single source. GBC also highlights the positive operational turnaround since the change in management, the high revenue visibility provided by multi-year government contracts, and the expansion of available rig capacity. The potential resumption of the high-margin carbon credit business offers additional upside potential.
The expected earnings trend underscores the growth potential. For fiscal year 2025/26 (ending June 30), analysts forecast revenue of USD 45.18 million and EBITDA of USD 3.73 million. In the current fiscal year 2026/27, revenue is expected to rise to USD 57.92 million and EBITDA to increase significantly to USD 10.02 million. At the same time, the company is expected to move into the black in the current fiscal year with net income of USD 4.21 million. For 2027/28, GBC anticipates a further increase in revenue to USD 66.85 million, EBITDA of USD 12.22 million, and net income of USD 5.77 million. Earnings per share are expected to improve from USD -0.01 to USD 0.04 and then to USD 0.05. This implies a P/E ratio of 11 for the current fiscal year and 8.5 for the next, a valuation that appears particularly attractive.
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Rheinmetall: Start of the Past Trading Week
Rheinmetall shares were among the standout performers of the past trading week. Following better-than-expected second-quarter results, the stock of Germany’s largest defence contractor surged by 10%. Over the past two weeks, the share price has thus risen by around 20%.
Rheinmetall announced that, according to preliminary figures, revenue in the second quarter of 2026 climbed to approximately EUR 3.289 billion, representing a 69% increase compared to the same period last year. Operating profit rose to EUR 562 million, significantly exceeding market expectations of EUR 469.9 million. All segments contributed to this strong performance. The outlook for further growth was also well received by the stock market. Rheinmetall’s backlog, which consists of firm orders and agreed-upon framework agreements, surpassed the EUR 80 billion mark in the second quarter of 2026. Contributing factors included the contract for kamikaze drones (loitering munitions) with the German Armed Forces and the order package with Romania worth EUR 5.7 billion. The fact that operating cash flow will be significantly negative due to deferred prepayments did not bother investors.
Analysts celebrated the figures. Bernstein has confirmed its price target of EUR 1,900 and views Rheinmetall shares as an outperformer. The valuation is attractive. Jefferies is somewhat more conservative with a price target of EUR 1,300. Nevertheless, it is enough for a “Buy” recommendation.
Hensoldt: Sell Despite Strong Numbers?
Hensoldt posted strong operating growth in the second quarter of 2026. Revenue rose 22% year-over-year to EUR 672 million, slightly exceeding market expectations. Adjusted EBITDA rose by 20.8%. However, the adjusted EBITDA margin of 13.8% remained below both the consensus estimate of 14.1% and the prior-year figure. Order intake performed particularly strongly. The EUR 1.33 billion corresponds to a book-to-bill ratio of 2.0.
mwb research points out, however, that a significant portion of the growth was less convincing in terms of quality. According to the report, approximately one-third of the revenue increase was attributable to pass-through revenue. In addition, most of the new orders were generated by the optronics segment for armoured vehicles, particularly through the Puma and Schakal programs. In the analysts’ view, these reflect established defence programs rather than new structural growth drivers. While the cancellation of the F126 frigate program is not expected to have a material financial impact on Hensoldt, the replacement frigate to be supplied by TKMS will be equipped with Saab systems and will not incorporate Hensoldt technology.
The full-year forecast remains unchanged. According to mwb’s assessment, the record order backlog of EUR 10.36 billion largely covers the revenue growth expected by the consensus through 2028. However, analysts view with skepticism the assumption that Hensoldt will be able to sustain order intake of more than EUR 5 billion per year even beyond that point. The market is thus pricing in not just a multi-year, but a decades-long procurement boom. At a share price of EUR 84, Hensoldt is valued at 13.4 times EV/EBITDA and 26 times earnings based on consensus estimates for 2028. mwb therefore reaffirms its “Sell” recommendation and price target of EUR 62. Over the past four weeks, the stock has gained about 20% in value and closed at EUR 80 on Friday.
Rheinmetall remains a core investment in the European defence sector. Zefiro Methane also appears attractively valued. Based on analysts’ estimates, the company trades at a forward P/E ratio of just 8.5 for the next fiscal year, despite offering positive and highly visible growth prospects. As a technology company, Hensoldt has traditionally commanded a valuation premium over conventional defence contractors. That does not appear likely to change.
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