I own this stock of HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF). I got this stock because it did a reverse takeover of Automodular Corp (TSX-AM, OTC-AMZKF) on March 12, 2018. There was a plan of arrangement whereby 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 that their revenue had been growing fast although it has recently stopped growing. They also have yet to make a profit. They did start a dividend late in 2018, so they are probably expecting to make a profit soon. Analysts expected a small profit in 2019, and now expect one again this year.
The dividend yields are low with dividend growth not yet started. The current dividend is low (below 2%) at 1.04%. The median dividend yield is also low at 1.34%. There has been no dividend increases to date, but this will at least have to wait they get a positive EPS.
The Dividend Payout Ratios (DPR) are for CF is fine. The DPR for EPS can not be calculated because of only EPS losses to date. The DPR for CFPS is 19% with 3 years coverage at 13%. The DPR for Free Cash Flow for 18% with 5 year coverage at 5%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is 0.16 and the current one is 0.21. These are both fine. The Liquidity Ratio for 2019 is low at 1.34, but add in cash flow after dividends and it is fine at 1.80. The Debt Ratio for 2019 is good at 2.26 with 5 year median at 2.03. The Leverage and Debt/Equity Ratio for 2019 is 1.79 and 0.79 respectively and these are good.
The Total Return per year is shown below for years of 4 years to the end of 2019. 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 chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative, so this test cannot be done. Since there are no positive EPS, the Price/Graham Price testing cannot be done.
I get a 5 year median Price/Book Value per Share Ratio of 1.27. The current P/B Ratio is 2.49 based on a Book Value of $170M, Book Value per Share of $5.34 and a stock price of $13.82. The current P/B Ratio is some 104% above the 5 year ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You would get a similar result in CDN$. This stock has only been around just over 5 years.
I get a 5 year median Price/Cash Flow per Share Ratio of 9.22. The current P/CF Ratio is 18.69 based on last 12 month Cash Flow of $23M, CFPS of $0.74 and a stock price of $13.82. The current P/CF Ratio is 103% above the 5 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You would get a similar result in CDN$. This stock has only been around just over 5 years.
I get an historical median dividend yield of 1.34%. The current dividend yield is 1.04% based on dividends of $0.20 and a stock price of $19.13. The current dividend yield is 22% below the historical dividend yield. This testing is in CDN$. Since the historical dividend yield period is less than 10 years, there is no point in doing a 10 year median dividend yield test.
The 5 year median Price/Sales (Revenue) Ratio is 4.12. The current P/S Sales Ratio is 7.37 based on 2020 Revenue of $59.5M, Revenue per Share of $1.87 and a stock price of $13.82. The current dividend yield is 79% above the 5 year ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You would get a similar result in CDN$. This stock has only been around just over 5 years.
Results of stock price testing is that the stock price is relatively expensive. The dividend yield test is showing the stock price as relatively expensive and the P/S Ratio test confirms this. The other tests I can do of P/CF Ratio and P/B Ratio says the same thing and there is nothing wrong with these tests.
Is it a good company at a reasonable price? I still like this company even though I got it through a reverse takeover. I am going to hold on to my shares although I do not have much. I like to see where it goes. This is a risky stock and that is not in any doubt. At the moment, I think it is relatively expensive although it is growing quickly.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (2) on Reuters Refinitiv Stock Report. The consensus would be a Strong Buy. The 12 month stock price consensus is $20.70 US$ or $29.17 CDN$. This implies a total return of 53.39% with 53.35% from capital gains and 1.4% from dividends.
There are no entries on Stock Chase. Ambrose O'Callaghan on Motley Fool thinks that this stock is worthy of your attention. The executive overview on Simply Wall Street gives it 2 stars out of 5. A writer on Simply Wall Street thinks investing in the company is risky. A writer on Wall Street talks about ownership. A lot more Hedge Funds own this than institutions. The company talks about a Therapeutic trial by the company on Newswire.
HLS Therapeutics Inc is a specialty pharmaceutical company. It is focused on the acquisition and commercialization of branded pharmaceutical products in the North American markets. The company is focused on treatment products for the central nervous system (CNS), and cardiovascular specialties. The company operates in Canada and the United States. Its web site is here HLS Therapeutics Inc.
The last stock I wrote about was about was Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF) ... learn more. The next stock I will write about will be Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF) ... learn more on Monday, May 25, 2020 around 5 pm.
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