Hammond Power Solutions Inc T.HPS.A

Alternate Symbol(s): HMDPF

Industrials

Hammond Power Solutions Inc. is a Canada-based company, which enables electrification through its broad range of dry-type transformers, power quality products and related magnetics. The Company's standard and custom-designed products are essential in electrical distribution networks through an extensive range of end user applications. The Company has manufacturing plants in Canada, the United States, Mexico and India and sells its products around the globe. Its products include power transformers, furnace transformers, converter transformers, regulating transformers, multi-pulse transformers, distribution transformers, pad mounted transformers and unitized substations. Its converter transformers are used in industries such as cement and steel plants, and other related applications. It serves various industries, including renewable energy, commercial infrastructure and industrial markets. It offers a variety of transformer and reactor solutions for the solar and wind energy market.

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Post by Possibleidiot01on May 24, 2024 7:31pm

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Trevor Rose's Insights - comment

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research(A Commentary)

24/05/2024

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Company Highlight: Hammond Power Systems (HPS.A)

Prior to HPS.A releasing first quarter earnings, the stock had been a small-cap darling on a strong uptrend. What appears to be a huge earnings miss, was heavily impacted by non-cash expenses through share-based compensation when employees exercise stock options. With the growth of the company, hiring has increased, but with the shares up 242% the value of share-based compensation has increased dramatically and is charged against earnings. While this is not a positive, it is something common that high growth companies can experience. We do not think it should be a big factor driving the stock down, but the big EPS miss and high levels of stock-based compensation were a talking point leading to the stock taking a hit. Sales growth did also slow a bit from prior quarters which the market further did not like. However, HPS.A is increasing prices for Q2, and if demand is inelastic to this price change, then growth could be back up into the teens. Distribution growth was strong in the US, and the backlog rose 11.1% year over year. Margins were still decent despite a less-attractive product mix and start-up costs in Mexico. SG&A costs did rise. While not a great quarter overall and there is some reason for the sell-off, HPS.A still has plenty of potential and recently increased its dividend substantially.
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