Is it a good company at a reasonable price? This is a small cap and so you should not invest any money in this company that you cannot afford to lose. I am going to keep my shares even though they are cancelling the dividends. I have invested in this company with my fooling around money. The price certainly seems cheap and analysts certainly expect the stock price to improve.
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. I bought some stock in 2018, 2020 and 2023 because this is a Health Care sector stock and there are few of them in the Canadian market.
When I was updating my spreadsheet, I noticed that this stock hit of high of $24.24 in January 2020 and has been going down ever since and is currently at $4.50. In 2012 I bought Automodular Corp and when it wound up in 2018, I owned shared in HLS Therapeutics Inc.
HLS Therapeutics Inc seemed like an interesting company so I bought some more shares. Going from Automodular Corp to the present, I have a loss of 27.17% per year with a capital loss of 29.42% and dividends of 2.25%. Going from when I first had HLS, I have a loss of 28.61% per year with a capital loss of 30.38% and dividends of 1.77%.
As you can see from the following chart, there is currently no growth when looking at the last 5 years. EPS and Net Income is 0% because the flows are negative. The dividend has not changed since it was started.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | -18.13% | -3.92% |
| 5 | EPS Growth | 0.00% | 0.00% |
| 5 | Net Income Growth | 0.00% | 0.00% |
| 5 | Cash Flow Growth | -37.64% | -9.01% |
| 3 | Dividend Growth | 0.00% | 0.00% |
| 5 | Stock Price Growth | -4.92% | -1.00% |
| 7 | Revenue Growth US$ | 208.01% | 11.91% |
| 7 | EPS Growth | 0.00% | 0.00% |
| 7 | Net Income Growth | 0.00% | 0.00% |
| 6 | Cash Flow Growth | -22.13% | -2.47% |
| 3 | Dividend Growth | 0.00% | 0.00% |
| 7 | Stock Price Growth | -12.44% | -1.32% |
If you had invested in this company in December 2016 when this stock was first issued, for $1,008.99 you would have bought 88 shares at $11.47 per share. In December 2022, after 7 years you would have received $74.80 in dividends. The stock would be worth $864.11. Your total return would have been $938.91.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $11.47 | $1,008.99 | 88 | 7 | $74.80 | $864.11 | $938.91 |
The current dividend yield is moderate with dividend growth non-existent and dividend about to be cancelled. The current dividend yield is moderate (2% to 4% ranges) at 4.72%. The 5 year median dividend yield is low (below 2%) at 1.08%. The dividend rate has not changed but the stock price has plummeted. The company is cancelling its dividend as it says it is growth company. Final Dividend will be June 2023.
The Dividend Payout Ratios (DPR) are not a problem. The DPR for 2022 for Earnings per Share (EPS) cannot be calculated because of earning losses. The DPR for 2022 for Cash Flow per Share (CFPS) for 2022 is 31% with 5 year non-calculable because of negative cash flows. The DPR for 2022 Free Cash Flow (FCF) is 67% with 5 year coverage at 50%. Dividends have not changed since they were started in 2018. However, the company has announced that they are cancelling the dividends this year.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 0.00% | 0.00% |
| CFPS | 31.04% | 0.00% |
| FCF | 69.94% | 50.07% |
Debt Ratios are good and what you want for a small cap. The Long Term Debt/Market Cap Ratio for 2022 is low and good at 0.36. The Liquidity Ratio for 2022 is a bit low, but fine at 142. The Debt Ratio for 2022 is high and good at 2.08. Leverage Debt/Equity Ratios for 2022 are low and good at 1.93 and 0.93 respectively.
| Type | Ratio |
|---|---|
| Lg Term | 0.36 |
| Intang/GW | 0.83 |
| Liquidity | 1.42 |
| Liq. + CF | 1.81 |
| Debt Ratio | 2.08 |
| Leverage | 1.93 |
| D/E Ratio | 0.93 |
The Total Return per year is shown below for years of 5 to 7 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.00% | 2.29% | 0.55% | 1.74% |
| 2015 | 7 | 0.00% | -1.03% | -2.17% | 1.15% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are all negative, so I can not use them for testing. The corresponding 10 year ratios are also negative and useless as are the historical ratios and so they are also useless.
With negative EPS values, I cannot properly calculate a Graham Price.
I get a 7-year median Price/Book Value per Share Ratio of 1.98. The current P/B Ratio is 0.90 based on a Book Value of $118.9M, Book Value per Share of 3.67 and a stock price of $3.27. The current P/B Ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2023 of $3.32. This implies a Book Value of $107.4M, a ratio of 0.98 with a stock price of $3.27. This P/B Ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I get a 7-year median Price/Cash Flow per Share Ratio of 17.41. The current P/CF Ratio is 6.96 based on Cash Flow of $15.2M for the last 12 months, Cash Flow per Share of $0.47 and a stock price of $3.27. The current ratio is 60% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I get a 4 year median dividend yield of 1.08%. The current dividend yield is 4.72% based dividends of $0.20 and a stock price of $4.24. The current dividend yield is 337% above the 4 year dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$, but you will get a similar result in US$.
The 10-year median Price/Sales (Revenue) Ratio is 6.10. The current ratio is 1.60 based on Revenue estimate for 2023 is $66M, Revenue per Share of $2.04 and a stock price of $3.27. The current ratio is 73% below the 7 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
Results of stock price testing is that the stock price is relatively cheap. All the testing is pointing to this, especially the S/P Ratio and dividend testing.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $16.85 ($12.37 US$). This implies a total return of 302.16% with 297.44% from capital gains and 4.72% from dividends. I find TD WebBroker has Buy (4), Hold ( 1) with a consensus a Buy. The 12 months consensus stock price is $15.00.
There are no entries on Stock Chase for this stock. Christopher Liew on Motley Fool thinks there is a buying opportunity in the current down market. But it is a high-risk, high reward type stock. Ambrose O'Callaghan on Motley Fool says the stock is cheap. The company put out a Press Release on their results for 2022. The company put out a Press Release on their first quarter of 2023.
Simply Wall Street via Yahoo Finance talks about the dividends on this stock. They think the dividend is unsustainable. Simply Wall Street gives out 2 warnings of dividend of 4.62% is not well covered by earnings or cash flows; currently unprofitable and not forecast to become profitable over the next 3 years. Simply Wall Street gives this stock 3 stars out of 5.
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 products include Clozaril, Vascepa, Trinomia, and Perseris. The company earns revenue in the form of product sales and royalties, out of which product sales contribute to most of the revenue. The company operates in Canada, the United States, and the Rest of the world. 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 Wednesday, May 31, 2023 around 5 pm. Tomorrow on my other blog I will write about Using BETA.... learn more on Tuesday, May 30, 2023 around 5 pm.
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