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Hammond Power Solutions (OTC) (TSE:HPS.A)
:HPS.A
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Hammond Power Solutions
(OTC:HPS.A)
78Outperform
Hammond Power Solutions (HPS.A) vs. S&P 500 (SPY)
Market Cap
C$952.75M
Dividend Yield1.4%
Average Volume (3M)60.12K
Price to Earnings (P/E)13.3
Beta (1Y)1.37
Revenue Growth11.02%
EPS Growth12.83%
CountryCA
Employees2,121
SectorIndustrials
Sector Strength68
IndustryElectrical Equipment & Parts
Share Statistics
EPS (TTM)6.01
Shares Outstanding9,126,624
10 Day Avg. Volume67,931
30 Day Avg. Volume60,117
Financial Highlights & Ratios
PEG Ratio1.04
Price to Book (P/B)N/A
Price to Sales (P/S)1.33
Price to Cash Flow (P/CF)14.70
P/FCF Ratio61.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$149.00Price Target Upside86.18% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Hammond Power Solutions Business Overview & Revenue Model
Company DescriptionHammond Power Solutions (HPS.A) is a leading manufacturer of dry-type transformers and related magnetics. The company operates in the electrical equipment sector, providing essential power solutions to a diverse range of industries, including renewable energy, oil and gas, mining, and infrastructure. HPS is known for its innovation and quality in designing and producing transformers that meet various specification and performance requirements.
How the Company Makes MoneyHammond Power Solutions generates revenue primarily through the sale of its dry-type transformers and magnetic products. These products are crucial components in electrical distribution systems, enabling efficient power transmission and regulation. The company caters to a global customer base across multiple sectors, ensuring a steady demand for its products. HPS's revenue model is centered around manufacturing and supplying these transformers to OEMs, distributors, and direct end-users. Additionally, the company may engage in strategic partnerships or collaborations that enhance its product offerings or expand its market reach, further contributing to its earnings.
Hammond Power Solutions Financial Statement Overview
Summary
Hammond Power Solutions demonstrates solid financial health with strong growth and profitability indicators in the income statement. The balance sheet reflects a conservative financial strategy with low leverage and robust equity. Cash flow generation is robust, supporting sustainable operations and potential growth investments. Overall, the company is well-positioned within the industrial goods sector with a promising financial outlook.Income Statement
Hammond Power Solutions shows robust growth in revenue and profitability. The TTM gross profit margin stands at 33.46%, and the net profit margin is 8.84%, indicating strong operational efficiency. Revenue has grown consistently, with a recent TTM increase of 8.0% from the previous year. EBIT and EBITDA margins are healthy at 12.22% and 13.80%, respectively, reflecting effective cost management and operational leverage.88
Very Positive
Balance Sheet
The company's balance sheet is solid with a low debt-to-equity ratio of 0.14, indicating conservative leverage. Return on equity (ROE) is strong at 24.99%, demonstrating effective use of shareholder funds. The equity ratio is 59.68%, highlighting a stable capital structure with significant equity backing. The company maintains a healthy cash position with net debt being negative, providing financial flexibility.85
Very Positive
Cash Flow
Cash flow statements reveal positive trends with a TTM free cash flow growth of 13.15%. The operating cash flow to net income ratio is 0.92, indicating strong cash generation relative to net income. Free cash flow to net income ratio is 0.39, suggesting a solid ability to reinvest in business operations while maintaining liquidity.83
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 766.82M | 710.06M | 558.46M | 380.20M | 322.10M | 358.78M | Gross Profit |
| 256.58M | 231.01M | 165.19M | 102.43M | 86.99M | 87.96M | EBIT |
| 93.72M | 86.72M | 59.44M | 23.15M | 22.04M | 20.54M | EBITDA |
| 105.84M | 96.00M | 69.74M | 30.05M | 29.33M | 24.86M | Net Income Common Stockholders |
| 67.76M | 63.40M | 44.83M | 15.18M | 14.06M | 11.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 15.54M | 52.59M | 28.13M | 20.91M | 14.79M | 23.37M | Total Assets |
| 205.53M | 408.34M | 302.67M | 235.10M | 189.39M | 214.95M | Total Debt |
| 32.60M | 37.03M | 17.59M | 28.76M | 25.39M | 44.10M | Net Debt |
| 17.06M | -15.56M | -10.53M | 7.85M | 10.60M | 20.73M | Total Liabilities |
| 96.79M | 177.97M | 125.78M | 109.10M | 75.48M | 105.19M | Stockholders Equity |
| 108.73M | 230.38M | 176.89M | 126.00M | 113.92M | 109.77M |
| Cash Flow | Free Cash Flow | ||||
| 26.65M | 23.55M | 27.68M | 14.38M | 14.75M | 13.80M | Operating Cash Flow |
| 62.46M | 44.11M | 37.01M | 20.45M | 19.68M | 17.81M | Investing Cash Flow |
| -34.51M | -19.36M | -12.67M | -10.91M | -4.75M | -2.97M | Financing Cash Flow |
| -23.16M | 755.00K | -22.30M | -4.26M | -24.18M | -7.39M |
Hammond Power Solutions Technical Analysis
Negative
80.03
Price Trends
88.77
Negative
108.05
Negative
113.99
Negative
Market Momentum
-2.61
Negative
35.75
Neutral
11.61
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HPS.A, the sentiment is Negative. The current price of 80.03 is below the 20-day moving average (MA) of 81.50, below the 50-day MA of 88.77, and below the 200-day MA of 113.99, indicating a bearish trend. The MACD of -2.61 indicates Negative momentum. The RSI at 35.75 is Neutral, neither overbought nor oversold. The STOCH value of 11.61 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:HPS.A.
Hammond Power Solutions Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | C$952.75M | 13.32 | 26.76% | 1.40% | 11.02% | 12.83% | |
73 Outperform | $218.86M | 7.80 | 7.46% | 7.41% | -1.93% | 3.61% | |
73 Outperform | C$550.29M | 21.13 | 8.37% | 1.46% | 2.41% | -16.76% | |
72 Outperform | $10.62B | ― | -5.31% | ― | 1.44% | -183.14% | |
71 Outperform | $86.80B | 19.74 | 21.72% | 2.51% | 1.30% | -18.15% | |
62 Neutral | $8.08B | 13.63 | 3.82% | 3.13% | 3.58% | -14.35% | |
61 Neutral | C$1.83B | 21.60 | 9.36% | 1.82% | 2.49% | -22.94% |
* Industrials Sector Average
Performance Comparison
TSE:HPS.A
Hammond Power Solutions
73.73
-76.23
-50.83%
TSE:CAE
CAE
30.56
3.57
13.23%
TSE:XTC
Exco Technologies
5.57
-1.36
-19.59%
TSE:CNR
Canadian National Railway
137.37
-35.10
-20.35%
TSE:RCH
Richelieu Hardware
33.54
-7.36
-18.00%
TSE:BDI
Black Diamond
8.25
-0.38
-4.40%
Hammond Power Solutions Earnings Call Summary
Earnings Call Date: Mar 20, 2025 | % Change Since: -3.47% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
The earnings call for Hammond Power Solutions highlighted significant achievements in revenue growth, capacity expansion, and strategic acquisitions, alongside strong financial performance and industry recognition. However, challenges persist in the form of a slowdown in commercial construction, delays in the induction heating business, increased SG&A expenses, and potential impacts from tariffs and commodity costs. Overall, the positive aspects of growth and strategic initiatives outweigh the challenges faced.Highlights
Double-Digit Revenue Growth
Hammond Power Solutions reported double-digit revenue growth with quarter-over-quarter revenues increasing by 11.5% and a total year-over-year growth of 11%.
Gross Margin Expansion
The company expanded its gross margins by 30 basis points for the full year, increasing from 32.5% to 32.8% due to strong price discipline and a favorable product mix.
Successful Capacity Expansion
Hammond Power Solutions opened a new factory in Mexico, adding more than $100 million in annual production capacity to its custom portfolio and announced an additional $20 million investment in further capacity expansion in Mexico.
Strategic Acquisition of Micron
Completed the acquisition of Micron, a leading manufacturer of industrial control transformers, enhancing the company's power quality portfolio and strengthening its position in the OEM market.
Strong Financial Performance
Reported a net income of $71 million for the year, up from $63 million in 2023, and adjusted EBITDA of $130.484 million, representing 16.6% of sales.
Recognition and Awards
The company received Great Place to Work certifications in Canada, the U.S., and India. Additionally, Bill Hammond received a Lifetime Achievement Award from the Electro Federation of Canada.
Lowlights
Commercial Construction Slowdown
Commercial construction was held back due to concerns over inflation, geopolitical uncertainty, and tariff policies, impacting the standard products segment.
Induction Heating Business Delay
Projects in the induction heating business experienced delays due to market uncertainty, causing some shipments to be pushed from Q4 to Q1 2025.
Increased SG&A Expenses
SG&A costs were higher in the fourth quarter than the previous three quarters, attributed to higher volume-related expenditures, timing of certain projects, and one-time expenses.
Impact of Tariffs and Commodity Costs
Potential tariffs and higher commodity costs, particularly for grain-oriented electrical steel, are expected to impact material input costs, although the company plans to pass these costs onto customers.
Company Guidance
During the Hammond Power Solutions' Fourth Quarter and 2024 Year-End Financial Results Conference Call, several key metrics and strategies were discussed. The company reported a quarter-over-quarter revenue growth of 11.5%, contributing to an annual growth rate of 11%. Gross margins increased by 30 basis points from 32.5% to 32.8% for the full year. Net income reached $71 million, up from $63 million in 2023, while adjusted EBITDA was $130.5 million, or 16.6% of sales, compared to $117.2 million, or 16.5% of sales, in the previous year. Earnings per share (EPS) were reported at $1.99 for the quarter and $6.01 for the year. The company executed significant expansions, including a new factory in Mexico, which will add over $100 million in annual production capacity, and completed the acquisition of Micron, enhancing its power quality portfolio. Capital expenditures amounted to $41 million, up from $20 million in 2023, with plans for $40 million in 2025. Despite geopolitical uncertainties, Hammond Power Solutions remains optimistic about future growth, supported by a strong balance sheet with a net cash position of $21 million.Hammond Power Solutions Corporate Events
Executive/Board ChangesShareholder Meetings
Hammond Power Solutions Announces Leadership Changes Amid Board Member Retirement
Neutral
Mar 26, 2025
Hammond Power Solutions Inc. announced the early retirement of Grant Robinson from its board of directors due to health issues, effective March 25, 2025. Fred Jaques will take over as lead director, and the company plans to add two new independent directors at the upcoming shareholder meeting. This leadership change is significant for HPS as it continues to strengthen its board and maintain its strategic direction in the industry.
Business Operations and StrategyFinancial Disclosures
Hammond Power Solutions Achieves Record Sales in Q4 2024
Positive
Mar 20, 2025
Hammond Power Solutions reported record sales of $208 million for the fourth quarter of 2024, marking an 11.5% increase from the previous year, with significant growth in custom and configured products. Despite some late-year charges related to acquisitions and investments, the company achieved a record earnings per share of $1.99 for the quarter, reflecting strong operational performance and strategic capacity expansions that are expected to support continued growth into 2025.
Financial Disclosures
Hammond Power Solutions to Announce Q4 and Year-End 2024 Financial Results
Neutral
Mar 10, 2025
Hammond Power Solutions Inc. announced it will release its financial results for the fourth quarter and year ending December 31, 2024, on March 20, 2025. The company will follow this with a conference call and webcast on March 21, 2025, which may provide insights into its financial health and future strategies, potentially impacting stakeholders and its market positioning.
Dividends
Hammond Power Solutions Declares Quarterly Dividend
Positive
Mar 5, 2025
Hammond Power Solutions Inc. has announced a quarterly cash dividend of $0.275 per Class A and Class B share, payable on March 28, 2025, to shareholders recorded by March 21, 2025. This declaration underscores HPS’s commitment to returning value to its shareholders, reflecting its stable financial position and confidence in ongoing operations, while also providing important tax information for Canadian shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.