Hercules plc (LON:HERC) is benefiting from growing infrastructure investment across the UK, with significant contract wins in water, power and energy supporting expectations for continued revenue growth and an improvement in profitability during FY2027.
The latest research note from SP Angel, dated 22 October 2026, highlights the company’s expanding contract pipeline, improving activity across key markets and potential benefits from recent acquisitions.
Research analyst Simon Strong maintains a Buy recommendation, pointing to opportunities created by long-term infrastructure investment and the company’s increasingly diversified operations.
With FY2026 revenue expected to reach approximately £130 million, Hercules is positioning itself to benefit from demand for specialist labour and construction services across major UK infrastructure programmes.
Hercules Delivers Revenue Growth Ahead of Expectations
Hercules expects to report FY2026 revenue of approximately £130 million, representing growth of around 7% year on year, excluding discontinued operations.
This performance is approximately 3% ahead of SP Angel’s previous forecast, supported by stronger activity in the water sector and contributions from recently acquired businesses.
The company has also invested significantly in its operational platform and group-wide enterprise resource planning systems.
Although these investments are expected to reduce underlying EBITDA in FY2026, SP Angel anticipates that the associated costs will begin to ease during FY2027, supporting an earnings recovery.
Key FY2026 and FY2027 Financial Highlights
- FY2026 forecast revenue: £130.1 million, approximately 7% growth.
- FY2027 forecast revenue: £135.4 million, representing approximately 4% further growth.
- FY2026 underlying EBITDA: £4.1 million, compared with £6.4 million in FY2025.
- FY2027 underlying EBITDA: £5.1 million, representing approximately 25% growth.
- FY2026 forecast pre-tax loss: £1.6 million.
- FY2027 forecast pre-tax profit: £0.3 million.
- FY2026 underlying earnings per share: 1.7p.
- FY2027 underlying earnings per share: 1.8p.
- FY2027 forecast EV/underlying EBITDA: 7.9 times.
These figures suggest that while FY2026 has been a period of significant operational investment, the broker expects profitability to improve as expenditure normalises and new contracts contribute to revenue.
Major Contract Wins Support Future Growth
One of the most encouraging developments highlighted by SP Angel is Hercules’ continued success in securing work across the UK infrastructure market.
The company’s Civil Projects division has secured more than £20 million in new contracts since the beginning of the 2026 financial year.
These awards include projects associated with the UK’s £104 billion AMP8 water industry investment programme, which is expected to support infrastructure activity over several years.
Among the recent contract wins are approximately £6 million of water sector awards announced in June, including £4.5 million in the Thames Water region and £1.6 million in the Anglian Water region.
Further contracts worth approximately £5 million were announced in October, principally covering construction services within the Thames Water area.
SP Angel estimates that the increasing level of AMP8-related activity could drive approximately 25% revenue growth in the Civil Projects division during FY2026.
This provides evidence of improving demand for the company’s specialist services.
Advantage NRG Strengthens Power and Energy Exposure
Hercules is also benefiting from its acquisition of Advantage NRG, which has expanded the company’s activities within the power and energy infrastructure markets.
According to SP Angel, Advantage NRG secured approximately £21 million of contracted work for FY2026 and beyond.
In July, the business announced two new contracts associated with the National Grid transmission network, with a combined value of £3.4 million.
The larger contract, worth approximately £2.6 million, covers work in the East of England through June 2027, while a second £0.8 million contract relates to work in North Wales.
These awards support Hercules’ strategy of broadening its revenue opportunities beyond traditional labour supply services.
The acquisition of Lyons Power Systems has also contributed to the group’s diversification, expanding its exposure to specialist infrastructure markets.
Hercules has established a dedicated Power & Energy Services division, led by Managing Director Marcus White, to develop opportunities in this growing sector.
SP Angel Highlights Potential for a Share Price Re-rating
Research analyst Simon Strong believes that the company’s expanding activities and improving earnings prospects could become increasingly important to investors.
In the latest SP Angel research note, Strong writes:
“We believe this is a potential catalyst for a re-rating of the stock once demonstrable earnings growth is visible.”
The comment reflects the broker’s view that Hercules’ recent acquisitions could support a stronger earnings base over time.
SP Angel also notes that the company has announced plans for enhanced divisional reporting, which could help investors better understand the performance of its different operations.
Although the broker acknowledges that the benefits are dependent on delivering sustainable earnings growth, it believes the company’s infrastructure exposure and contract momentum provide grounds for a positive outlook.
Sizewell C Could Provide a Longer-Term Opportunity
Another potential growth opportunity comes from the Sizewell C nuclear power project.
SP Angel highlights that construction activity is under way, with more than £1 billion of supplier contracts awarded and almost 2,000 workers on site at the time of the research note.
Hercules has submitted a tender to supply operatives to the project.
If successful, this could represent a meaningful opportunity over the project’s expected duration of more than ten years.
However, SP Angel has adopted a conservative approach to forecasting potential contributions, reflecting the uncertainty around the timing and scale of any contract awards.
The opportunity nevertheless illustrates the company’s exposure to major infrastructure developments that could support demand for specialist labour over the longer term.
Refinancing Provides Additional Financial Flexibility
In June 2026, Hercules agreed an enhanced funding package with IGF Business Credit Limited.
The arrangement includes an invoice discounting facility of up to £20 million and £5 million of term loans.
The enlarged invoice discounting facility represents a 25% increase in the group’s previous funding line and is intended to support its working capital requirements and growth ambitions.
Of the term loan proceeds, £4 million was used to settle the final earn-out payment relating to Advantage NRG.
While the refinancing provides additional funding flexibility, the company’s debt position remains an important consideration.
SP Angel forecasts net debt, excluding leases, of approximately £10.9 million in FY2026, declining to £9.9 million in FY2027.
The ability to manage borrowing costs and convert revenue growth into stronger cash generation will therefore be important as Hercules continues developing its operations.
UK Infrastructure Investment Supports the Outlook
Hercules operates in markets supported by long-term investment requirements, particularly water infrastructure, electricity transmission and energy development.
SP Angel highlights the UK’s substantial infrastructure investment pipeline, including the AMP8 water programme and potential annual investment of £40 billion in the clean power market between 2025 and 2030.
These programmes create opportunities for companies supplying the specialist workforce and technical services required to deliver complex infrastructure projects.
With recent acquisitions expanding its capabilities, Hercules has a broader range of services to offer customers across these markets.
The company’s ability to win contracts across water, power and energy suggests that its diversification strategy is beginning to deliver commercial benefits.
Final Thoughts
Hercules’ latest trading update presents a business experiencing continued demand across several important UK infrastructure markets.
Revenue growth ahead of expectations, more than £20 million of Civil Projects contract wins and approximately £21 million of contracted work secured by Advantage NRG provide a positive foundation for future activity.
Although FY2026 profitability has been affected by investment expenditure, SP Angel expects underlying EBITDA to recover by approximately 25% during FY2027.
The company’s expanding presence in water, power and energy infrastructure, together with potential opportunities from projects such as Sizewell C, provides several possible avenues for longer-term growth.
SP Angel’s Buy recommendation reflects its positive assessment of Hercules’ commercial momentum and earnings recovery potential, although contract execution, profitability and debt management remain important factors.
For Hercules, the next stage will be demonstrating that its growing contract pipeline can translate into improved margins, stronger earnings and sustainable cash generation.
