Service Stream's Turnaround Finds a New Growth Pillar in Defence

A once-written-off contractor turned resilient infrastructure services business, and a landmark defence maintenance contract now has fund managers calling it undervalued.

30 Jun 2026 · 3 min read

Service Stream turned into a compelling turnaround story after long-time believers first bought in when the market had written it off as a typical bad contractor story, and by 2026 a landmark defence maintenance contract has become the company's fourth growth pillar, with fund managers now calling the stock undiscovered, under-researched and undervalued.

A turnaround from a written-off contractor story

Ophir Asset Management said it initially bought into Service Stream in 2023, after the market had already written it off as a typical bad contractor story, having taken on several utilities contracts that were poorly priced and poorly risk-managed, with margins collapsing and the stock de-rating heavily. Ophir could see the opposite was true, since the problematic contracts were finite and management had already shown evidence of turning the business around.

We initially bought into Service Stream in 2023, after the market had already written it off as a typical 'bad contractor' story. However, we could see the opposite was true. The contracts in question were finite.

— Ophir Asset Management, Article, June 2026

Defence emerges as a fourth growth pillar

QVG Capital said Service Stream completed a smaller-scale acquisition of an electrical contractor, alongside contract awards worth around $450 million and good progress ramping a new defence contract, both bode well for future earnings. Ausbil Investment Management described Service Stream as an essential infrastructure service provider that recently secured a services-based defence contract, making defence the fourth pillar of its business, calling the stock undiscovered, under-researched and under-owned, with a net cash, capital-light balance sheet, and defence potentially becoming a billion-dollar revenue line within a few years while the stock trades below market multiples. Ausbil separately called Service Stream an overlooked value play perfectly poised to capture a surge in Australian defence spending, having recently secured a watershed contract to manage defence bases in both the Northern Territory and South Australia, on top of a $9 billion pipeline of telecommunications works.

It's undiscovered, under-researched and under-owned, and is net cash and capital light. Defence could be a billion dollar revenue line in the next few years.

— Ausbil Investment Management, Article, June 2026

A decade-long holder sees a positive outlook

Centennial Asset Management initiated a new position in May as the fund increased its exposure to digital and resources infrastructure. Prime Value Asset Management said the stock rose 21.5 percent, the largest absolute contributor to performance, having followed and owned Service Stream for more than a decade since it was still a micro-cap under $500 million, crediting management with a great job expanding opportunities, improving margins and building a resilient business, with a positive outlook overall.

A new vertical growing faster than the market expects

Ophir Asset Management said Service Stream was one of its largest contributors for the month, providing utility, telecommunications and facility maintenance services, having added a new defence maintenance vertical it believes can grow larger than the market is currently anticipating, with the share price ending the month up 11.8 percent.

What fund managers say they are watching next is continued ramp-up of the new defence contract and its potential to become a billion-dollar revenue line, delivery on the $9 billion telecommunications pipeline, conversion of the $450 million in contract awards, and whether the market catches up to what long-time holders describe as an under-researched, undervalued turnaround.