I own this stock of Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF). I bought this stock as my main purchase for the TFSA in 2013 and 2014. I picked Hammond initially in 2013 as my main buy because it has good growth and reasonable dividend. Also, I think that it important to try out newer smaller companies for investment purposes. Companies on the TSX are always changing and it is good to get into new industries and new companies. The problem of this, of course, is you do not always know what industries and companies will be long lasting.
When I was updating my spreadsheet, I noticed that they had an earnings loss because they took a hit or loss from a discontinued business. They also give a EPS based on continuing business and this one is also important.
The dividend yield started off in the low range, but has moved to a moderate range. This is mainly because of stock price dropping. The current dividend yield is 3.57%, the 5 and 9 year median dividend yields are 3.20% and 2.65%. The dividends grew after they were started in 2009, but they had been flat since 2014 to 2018. However, the company raised the dividend in 2019 by 16.7%. They obviously feel that they are going to be doing better in the near future.
The Dividend Payout Ratios are improving. The 2018 DPR is not calculable because of negative earnings. However, the 5 year coverage is 364%. The DPR for CFPS for 2018 is good at 20% with 5 year coverage at 16%.
Debt Ratios are good. The company has no long term debt. The Liquidity Ratio is fine, but I prefer it to be always over 1.50. For 2018, the Liquidity Ratio was 1.47, with 5 year median at 1.51. The Debt Ratios has always been good and the one for 2018 is 2.12 with 5 year median at 2.46. The Leverage and Debt/Equity Ratios have also always been good with the ratios for 2018 at 1.89 and 0.89 respectively and with 5 year medians at 1.64 and 0.64 respectively.
The Total Return per year is shown below for years of 5 to 17 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
I have had this stock for just over 6 years and my total return is 1.17% with a capital loss of 1.87% and dividends of 3.04%.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 3.71% | -0.28% | -4.00% | 3.72% |
| 2008 | 10 | 10.22% | 0.68% | -2.44% | 3.13% |
| 2003 | 15 | 23.71% | 18.27% | 5.44% | |
| 2001 | 17 | 15.28% | 11.84% | 3.43% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.63, 15.38 and 19.13. The corresponding 10 year ratios are 11.30, 14.07 and 16.85. The historical ratios are 6.93, 9.10 and 10.73. The current P/E Ratio, using EPS from continuing operations, is 9.69. This is based on last 12 month EPS of $0.81 and a stock price of $7.85. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $12.95. The 10 year low, median, and high median Price/Graham Price Ratios are 0.60, 0.79 and 0.97. The current P/GP Ratio is 0.61 based on a stock price of $7.85. This stock price testing suggests that the stock price is relatively reasonable and below the median. It is almost cheap.
I get a 10 year median Price/Book Value per Share Ratio of 0.90. The current P/B Ratio is 0.85 based on a Book Value if /4107M, Book Value per Share of $9.20 and a stock price of $7.85. The current ratio is 5.4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 2.65%. The current dividend yield is 3.57% based on dividends based on dividends of $0.28 and a stock price of $7.85. The current yield is 35% above the historical median. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.39. The current P/S Ratio is 0.28 based on last 12 months Revenue of $325.7M, Revenue per Share of $28.12 and a stock price of $7.85. The current ratio is 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. This is showing up the P/S Ratio, the dividend yield, and P/E Ratio testing. Under the P/GP Ratio testing the stock price is close to cheap. It is only showing up as relatively reasonable and below the median under the P/B Ratio test.
When I look at analysts’ recommendations, I find that no analysts are following this stock.
See what analysts are saying on Stock Chase. They have mixed views, but few follow this stock. A writer on Simply Wall Street talks about some recent insider selling. However the CEO and Chairman has recently bought shares. A writer on Simply Wall Street talks about the company’s debt. On SB Wire there is an article about growth in Industrial Transformers. The article mentions this company. Lisa Richards on Driscoll Register says the company is oversold.
Hammond Power Solutions Inc is a Canada-based manufacturer of dry-type magnetics. It is engaged in the design and manufacture of custom electrical engineered magnetics. The firm is also a manufacturer of standard electrical dry-type, cast resin, and liquid-filled transformers. It supports solid industries, such as oil and gas, mining, steel, waste and water treatment, and wind power generation. The company operates in following geographical markets Canada, the United States, Mexico, and India in which it derives majority revenue in the United States and Mexico. Its web site is here Hammond Power Solutions Inc.
The last stock I wrote about was about was Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more. The next stock I will write about will be Mullen Group Ltd (TSX-MTL, OTC-MLLGF) ... learn more on Friday, May 17, 2019 around 5 pm. Tomorrow on my other blog I will write about Teaching my Son to Read.... learn more on Thursday, May 17, 2019 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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