HLS Therapeutics Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Healthcare. Fast growing small cap stocks are not easy to evaluate. It has no earnings, but losses are getting smaller. On the other hand, analysts do not expect the company will do as well in 2018 as it did in 2017. The second quarter supports this. I plan to hold my shares, but then I have less than 100 shares. The stock price might be reasonable. Analysts expect the stock price to go up some 30% over the next 12 months. See my spreadsheet on HLS Therapeutics Inc.

I own this stock of HLS Therapeutics Inc. (TSXV-HLS, OTC- HLTRF). I got this stock because it did a reverse takeover of Automodular Corp (TSXV-AM, OTC-AMZKF) on March 12, 2018. There was a plan of arrangement where by Automodular shareholders got 0.165834 HLS common shares and one HLS preferred share. The HLS preferred shares were a form of contingent value right allowing AMD shareholders to have an equity stake linked to the outcome of litigation that had been ongoing for several years between AMD and General Motors.

When I was updating my spreadsheet, I noticed there is only 2 to 3 years of financial data on this company, so it is not much to go on. Some sites are showing old Automodular Corp financial statements, but this is wrong. The old Automodular statements have nothing to do with what has or will happen with HLS Therapeutics. Also, even though the company is reporting in US$ the analysts estimates are in CDN$.

They decided to start paying dividends this year with a first dividend paying in December. Currently the yield is low with a yield 1.29%. The dividend is paid in CDN$ even though the company is reporting in US$. It has hard to know what the company will do in the future concerning dividends. They are currently not making any profit, but they do have cash flow.

The short answer to if they can afford their dividends is no because they have yet to earn a profit. Analysts expect them to earn one in 2020. In 2020 they are expected to earn $0.10 and the dividend is $0.20. However, for 2018, the Dividend Payout Ratio for CFPS is just 3.58%.

All the debt ratios are fine for this company. The Long Term Debt/Market Cap is fine at 0.82 with it dropping to a current ratio 0.45. The Liquidity Ratio for 2017 is good at 1.88 and increasing to a current ratio of 2.30. The Debt Ratio for 2017 is 1.88 and increasing to a current one of 2.01. The Leverage and Debt/Equity Ratios for 2017 are 2.13 and 1.13 and decreasing to current ones of 1.99 and 0.99.

The was not much change in stock price until this year. In 2018 so far, the stock is up by 29% in CDN$ and by 53% in US$. The initial private placement of this in August 2015 was for $10 a shares US$.

The 5 year low, median, and high median Price/Earnings per Share Ratios are not available because this company has had no earnings.

I get a Graham Price of $4.48 CDN$. This is the best I can do. The Price/Graham Price Ratio is 3.55 based on a stock price of $15.50 CDN$. There is nothing to compare this too, but a P/GP Ratio of 3.46 is a high one.

I get a 3 year median Price/Book Value per Share Ratio of 1.23 US$. The current P/B Ratio is 1.74 US$ based on Book Value of $184.5M US$, Book Value per Share of $6.74 US$ and a stock price of $11.70 US$. The current yield is some 41% higher than the 3 year ratio. This stock price testing would suggest that the stock price is relatively expensive.

I cannot do any testing using the dividend yield. They have only started to pay dividends this year and only one quarterly dividend. The dividends are paid in CDN$. The current yield is low at 1.29% based on dividends of $0.20 CDN$ and a stock price of $15.50 CDN$.

The 3 year median Price/Sales (Revenue) Ratio is 3.07 CDN$. It would seem that analysts expect revenues to be lower in 2018 than in 2017. The second quarterly statements support this. The current P/S Ratio is 5.05 based on 2018 Revenue estimates of $82.4M, Revenue per Share of $3.01 and a stock price of $15.50. The current P/S Ratio is some 68% higher than the 3 year ratio. This stock price testing would suggest that the stock price is relatively expensive.

A good P/B Ratio is considered to be 1.50. So, the 3 year ratio of 1.23 US$ is low and the current P/B Ratio of $1.74 is only 12% above the good P/B Ratio of 1.50. So perhaps by this reckoning the stock price may not be expensive. The P/S Ratio tells us something different. The current P/S Ratio is 3.07 CDN$ where a good ratio for a small cap is 1.00. The current P/S Ratio is therefore very high at 5.15 CDN$. On the other had the Revenue to 2017 has increased by 94% per year in US$ and 85% in CDN$.

When I look at analysts’ recommendations, I find Buy (2) recommendations. It is surprise for this small company to have 2 analysts following it. The 12 month target stock price is $20.00. This implies a total return of 30.32% with 29.03% from capital gains and 1.29% from Dividends.

Automotive put out a press release on Market Wired about their arrangement with HLS Therapeutics. Hugh Holland on What’s on Thorold says analysts expect a lower EPS loss of $0.01 for the third quarter. Brandon Baker on Bharata Press says the stock reached a recent high of $16.10. Bernadette Hatcher on Simply Wall Street asks if you should buy this stock for its dividend.

HLS Therapeutics Inc is a specialty pharmaceutical company focused on the acquisition and commercialization of branded pharmaceutical products in the North American markets. Its web site is here HLS Therapeutics Inc.

The last stock I wrote about was about was Johnson and Johnson (NYSE-JNJ) ... learn more. The next stock I will write about will be IBI Group Inc. (TSX-IBG, OTC-IBIBF) ... learn more on Monday, November 19, 2018 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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