IIs it a good company at a reasonable price? The company is selling at a reasonable, if not cheap price. This company is in the high risk category. I am still hoping that this company will do well, but I bought it with my fooling around money. I originally based on buy of this stock on the fact that the major players at Automodular Corp, invested in this company.
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 analyst have been expecting this company to have earnings (that is positive ones) in 2019, then 2020 and 2021. However, this did not occur. Last year, analysts expected EPS to be, for 2021, 2022 and 2023 to be $0.50, $0.47, and $2.23. Now future earnings, in 2022, 2023 and 2024 are expected to be -$0.18, $0.80, and $0.92. So, expectations have been lowered.
Last year also, analysts expect in 2021, 2022 and 2023 Revenue of $69M, $150M and $242M US$. This also did not occur and this year. Revenue for 2021 came in at $60M analysts expect in 2022, 2023 and 2024, Revenue to be $77M, $142M and $214M. So, revenue expectations have also been lowered. However, Analysts are still expecting great things from this stock, but now they expect things to pick up in 2024.
If you had invested in this company in December 2015, the end of the first year after it went public, $1008.99 you would have bought 88 shares at $11.47 per share. In December 2021, after 6 years you would have received $70.40 in dividends. The stock would be worth $1,287.48. Your total return would have been $1,357.88.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $11.47 | $1,008.99 | 88 | 6 | $70.40 | $1,287.48 | $1,357.88 |
The dividend yields are low with dividend growth non-existent. The current dividend yield is low (below 2%) at 1.42%. The 3 year median dividend yield is also low at 1.11%. There has been no growth in dividends, which are paid in CDN$.
The Dividend Payout Ratios (DPR) are fine. The company has yet to make a profit, so there is no DPR for EPS. The DPR for Cash Flow per Share for 2021 is 31% with 4 year coverage at 20%. The DPR for Free Cash Flow for 2021 is 40% with 5 year coverage at 25%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.23. This is low and good. The Liquidity Ratio for 2021 is good at 1.58. The Debt Ratio is good at 2.40. The Leverage and Debt/Equity Ratios for 2021 are also good at 1.72 and 0.72. Good Debt Ratio are, especially for small companies really help them survive in adverse market conditions.
The Total Return per year is shown below for years of 5 to 6 to the end of 2021 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | 9.23% | 7.94% | 1.29% |
| 2015 | 6 | 0.00% | 5.57% | 4.58% | 0.99% |
The Total Return per year is shown below for years of 5 to 6 to the end of 2021 in US$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | 9.95% | 8.64% | 1.31% |
| 2015 | 6 | 0.00% | 6.70% | 5.69% | 1.01% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and not usable. The corresponding 6 year ratios are also negative and unusable.
I calculate a Graham Price of $1.19. The 6 year low, median, and high median Price/Graham Price Ratios are 7.10, 9.12 and 12.17. The current P/GP Ratio is 11.93 based on a stock price of $14.19. The current ratio is between the median and high ratios of the 6 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 6 year median Price/Book Value per Share Ratio of 1.54. The current P/B Ratio is 2.26 based on a Book Value of $204M, Book Value per Share of $6.29 and a stock price of $14.19. The current ratio is 47% above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 6 year median Price/Cash Flow per Share Ratio of 13.84. The current ratio is 23.91 based on Cash Flow for the last 12 months of $19M, Cash Flow per Share of $0.59 and a stock price of $14.19. The current ratio is 73% above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 6 year and historical median dividend yield of 1.11%. The current dividend yield is 1.41% based on a dividend of $0.20 and a stock price of $14.19. The current yield is 27% above the 6 year and historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 6 year median Price/Sales (Revenue) Ratio is 7.51. The current P/S Ratio is 4.66 based on Revenue estimate for 2022 of $99 ($77 US$) and a stock price of $14.19. The current ratio is 38% below the 6 year median ratio. This stock price testing suggests that the stock price is relatively reasonable cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield test says that as well as the P/S Ratio test. Part of the problem in testing is there has been no positive earnings. Also, there is big difference in the CDN$ and US$ stock price (overt 5% difference). This is because this stock is thinly traded on the US market, but also on the Canadian market.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (3) recommendations. The consensus would be a Strong Buy. The 12 month stock price target is $28.96 ($22.56 US$). This implies a total return of 105.50% with 104.09% from capital gains and 1.41% from dividend based on a stock price of $14.19.
This stock is not mentioned on Stock Chase. Simply Wall Street via Yahoo Finance has a report reviewing this stock and looking at dividends. A Simply Wall Street on Yahoo Finance talks about who owns this company. A Simply Wall Street report on Yahoo Finance talks about the recent analysts’ downgrades in EPS and Revenue. The company on Newswire announces its fourth quarter results. The company announces its first quarterly results 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. 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 30, 2022 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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