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 analysts have been expecting this stock to make a profit. For 2019 it was expected to have an EPS of $0.05 and then last year in 2020 analysts expected an EPS of $0.36. Instead, EPS for 2019 and 2020 were a loss of $0.67 and a loss of $0.48. For 2021 analysts are now expecting a loss of $0.50, but then EPS in 2022 of $0.47 and for 2023, EPS of $2.23.
The dividend yields are low with dividend growth non-existent. The current dividend yield is low (under 2%) at 1.18%. Dividends are paid in CDN$ funds. There has been no change to the dividend since it was first started in 2018. This is probably because the EPS cannot cover the dividends.
The Dividend Payout Ratios (DPR) need improving and analysts think this will happen. The DPR for EPS for 2020 cannot be calculated because this stock has no positive EPS. The DPR for CFPS is 54% with 3 year coverage at 18%. The DPR for Free Cash Flow for 2020 cannot be calculated because the FCF for 2020 is negative. The 5 year coverage is at 15%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.22. The Liquidity Ratio for 2020 is 1.29. If you add in cash flow after dividends it is still low at 1.41. I prefer this to be 1.50 or above. The Debt Ratio is high and good at 2.26. The Leverage and Debt/Equity Ratios are low and good at 1.80 and 0.80.
The Total Return per year is shown below for years of 5 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | 9.75% | 9.44% | 0.31% |
The Total Return per year is shown below for years of 5 to the end of 2020 in US$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 3.51% | 11.14% | 10.82% | 0.32% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative. The corresponding 6 year ratios are also all negative. No testing can be done with the P/E Ratio.
I estimate a current Graham Price of $1.19. The 6 year low, median, and high median Price/Graham Price Ratios are 7.08. 8.64 and 10.72. The current P/GP Ratio is 14.19 based on a stock price of $16.91. The current ratio is above the 6 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms.
However, because of what analysts think will be the new EPS for 2022, the P/GP Ratio for 2022 is just 1.88. This is way below the 6 year median low ratio. In this case, this stock price testing suggests that the stock price is relatively cheap.
I get a 5 year median Price/Book Value per Share Ratio of 1.43. The current P/B Ratio is 2.66 based on a Book Value of $168M, Book Value per Share of $5.23 and a stock price of $13.92. The current P/B Ratio is 86% above the 5 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$ terms. You will get a similar result in CDN$ terms.
Book Value has been going down because the company is currently not earning any money. This could change if analysts are right about the future earnings of the company.
I get a 4 year median Price/Cash Flow per Share Ratio of 10.24. The current P/CF Ratio 39.84 based on a stock price of $13.92, Cash Flow for last 12 months of $11.18M, and Cash Flow per Share of $0.35. The current ratio is 289% above the 4 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$ terms. You will get a similar result in CDN$ terms.
I get an historical and 2 year median dividend yield of 1.08%. The current dividend yield is 1.18% based on dividend $0.20 and a stock price of $16.91. The current dividend yield is 9.5% above the historical and 2 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$ terms.
The 5 year median Price/Sales (Revenue) Ratio is 6.21. The current P/S Ratio is 6.49 based on a stock price of $13.92, Revenue estimate for 2020 of $69M, and Revenue per Share of $2.14. The current ratio is 4.6% above the 5 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in US$ terms. You will get a similar result in CDN$ terms.
Results of stock price testing is that the stock price is probably reasonable. Analysts keep expecting the company to have positive earnings and it had not happened yet. If it does, the stock price could be considered cheap. They expect earnings to be positive in 2022. It is also possible that the pandemic has affect the company’s ability to have positive earnings sooner. I know some of the results show the stock price as expensive, but this will change when positive earnings are achieved.
Is it a good company at a reasonable price? The stock price is probably reasonable. I got and intended to keep this stock because the people who ran Automodular Corporation invested in this company. It will be interesting to see how this all works out.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (3). The consensus would be a Buy. The 12 month stock price is $31.19 ($25.86 US$). This implies a total return of 85.63% with 1.18% from dividends and $84.45% from capital gains.
Nikhil Kumar on Motley Fool recently did write up on this stock. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 2 risks. There is insider selling, but it seems to be all from the x-CEO. A writer on Simply Wall Street talks about the company’s dividend. Note that dividends are paid in CDN$ and have not changed. Dividend paid in US$ are affected by currency exchange rates. A writer on Simply Wall Street talks about declining estimates.
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 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 Friday, May 28, 2021 around 5 pm. Tomorrow on my other blog I will write about Paying a Reasonable Price.... learn more on Thursday, May 27, 2021 around 5 pm.
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