Austin Engineering (ASX:ANG) stock is set to trade at a higher earnings multiple due to its low capital expenditure, high return on capital employed, and strong free cash flow generation, according to a Tuesday note by Euroz Hartleys.
Euroz said it is confident in Austin's medium revenue outlook and expects regulatory changes under the Trump administration to extend mine life and unlock greenfield sites, boosting ANG's growth in the US mining sector.
The company, which manufactures coal, gold, and copper open-pit truck bodies in the US, is also well-positioned in South America, where major miners are increasing copper investments, Euroz noted.
The firm highlighted ANG's strong relationships in Pilbara iron ore, ensuring stable long-term earnings.
The opening of new mines will drive demand for truck bodies, typically outfitted with original equipment manufacturing bodies, which the company is increasing market share in, Euroz added.
Additionally, Euroz Hartleys anticipates a short replacement cycle for Austin's truck bodies, with demand expected to rise as the low-demand period ends.
Euroz maintained the company's buy rating and its AU$0.85 price target.
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