'Earnings upside likely': The hot ASX stock that no one's talking about

You never see this ASX share mentioned in the media, but it's quietly earning the praise of professional investors.

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The brutal reality of the stock market is that even if a business is enjoying earnings upgrades, what it does is just not "sexy" enough to catch the attention of commentators.

This could be the case with MMA Offshore Ltd (ASX: MRM).

Although not mentioned much in the financial press, this ASX stock is going gangbusters. And experts like Glenmore Asset Management portfolio manager Robert Gregory are bullish on it.

Let's examine what's going on:

'A very positive trading update'

MMA Offshore provides marine transport and logistics services to clients with oceanic infrastructure like oil rigs and subsea cables.

With the energy sector enjoying a boom since Russia stampeded into Ukraine almost two years ago, MMA Offshore has seen its revenue and net profit head north.

The market has appreciated it, sending its share price rocketing 338% since the start of last year.

Gregory, in a memo to clients, noted the MMA share price soared 25% last month alone.

"MMA Offshore issued a very positive trading update, stating that EBITDA for 1H24 is expected to be in the range of $55 to $60 million, which was 40% to 45% ahead of market expectations."

Looking good for earnings upgrades 

The business is currently firing on all cylinders.

"Pleasingly, MMA Offshore said all divisions of the group — vessels, subsea and project logistics — are performing strongly in FY24 to date."

The outstanding aspect of the MMA Offshore operations is that its expenses are reasonably stable even when the volume of work scales up.

This makes for plenty of future potential, according to Gregory.

"Given MMA Offshore has a high fixed cost base, we believe further earnings upside is likely, given the tight demand/supply conditions for the vessels that MRM charters to the oil and gas and offshore wind sectors."

Gregory's peers unanimously agree with his affection for this ASX stock.

CMC Invest currently shows all five analysts that cover MMA Offshore rate its shares as a strong buy.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Mma Offshore. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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