company background image
HEO

H2O Innovation TSX:HEO Stock Report

Last Price

CA$2.20

Market Cap

CA$198.0m

7D

8.4%

1Y

-17.0%

Updated

12 Aug, 2022

Data

Company Financials +
HEO fundamental analysis
Snowflake Score
Valuation3/6
Future Growth4/6
Past Performance1/6
Financial Health5/6
Dividends0/6

HEO Stock Overview

H2O Innovation Inc. designs and provides integrated water treatment solutions based on membrane filtration technology.

H2O Innovation Competitors

Price History & Performance

Summary of all time highs, changes and price drops for H2O Innovation
Historical stock prices
Current Share PriceCA$2.20
52 Week HighCA$2.90
52 Week LowCA$1.75
Beta1.08
1 Month Change7.32%
3 Month Change0.92%
1 Year Change-16.98%
3 Year Change89.66%
5 Year Change49.66%
Change since IPO-96.86%

Recent News & Updates

Aug 12
Getting In Cheap On H2O Innovation Inc. (TSE:HEO) Might Be Difficult

Getting In Cheap On H2O Innovation Inc. (TSE:HEO) Might Be Difficult

With a price-to-earnings (or "P/E") ratio of 79.1x H2O Innovation Inc. ( TSE:HEO ) may be sending very bearish signals...

May 25
What Is H2O Innovation Inc.'s (TSE:HEO) Share Price Doing?

What Is H2O Innovation Inc.'s (TSE:HEO) Share Price Doing?

While H2O Innovation Inc. ( TSE:HEO ) might not be the most widely known stock at the moment, it received a lot of...

Shareholder Returns

HEOCA MachineryCA Market
7D8.4%4.5%3.0%
1Y-17.0%-34.5%0.7%

Return vs Industry: HEO exceeded the Canadian Machinery industry which returned -36% over the past year.

Return vs Market: HEO underperformed the Canadian Market which returned -0.2% over the past year.

Price Volatility

Is HEO's price volatile compared to industry and market?
HEO volatility
HEO Average Weekly Movement5.5%
Machinery Industry Average Movement10.6%
Market Average Movement10.6%
10% most volatile stocks in CA Market19.0%
10% least volatile stocks in CA Market4.3%

Stable Share Price: HEO is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: HEO's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2000900Frederic Dugrehttps://www.h2oinnovation.com

H2O Innovation Inc. designs and provides integrated water treatment solutions based on membrane filtration technology. The company operates through three segments: Water Technologies and Services, Specialty Products, and Operation and Maintenance Services. It offers membrane filtration technology for municipal, industrial, energy, and natural resources end-users; and aftersales services, as well as digital solutions to monitor and optimize water treatment plants.

H2O Innovation Fundamentals Summary

How do H2O Innovation's earnings and revenue compare to its market cap?
HEO fundamental statistics
Market CapCA$198.02m
Earnings (TTM)CA$2.52m
Revenue (TTM)CA$167.51m

78.7x

P/E Ratio

1.2x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HEO income statement (TTM)
RevenueCA$167.51m
Cost of RevenueCA$121.37m
Gross ProfitCA$46.15m
Other ExpensesCA$43.63m
EarningsCA$2.52m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.028
Gross Margin27.55%
Net Profit Margin1.50%
Debt/Equity Ratio35.0%

How did HEO perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is HEO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HEO?

Other financial metrics that can be useful for relative valuation.

HEO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.4x
Enterprise Value/EBITDA17.2x
PEG Ratio1.5x

Price to Earnings Ratio vs Peers

How does HEO's PE Ratio compare to its peers?

HEO PE Ratio vs Peers
The above table shows the PE ratio for HEO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average26.9x
SIS Savaria
50.4x48.6%CA$965.7m
REKO Reko International Group
14.8xn/aCA$28.8m
ATA ATS Automation Tooling Systems
31.7x21.5%CA$4.2b
CNO California Nanotechnologies
11xn/aCA$3.7m
HEO H2O Innovation
78.7x53.2%CA$198.0m

Price-To-Earnings vs Peers: HEO is expensive based on its Price-To-Earnings Ratio (78.7x) compared to the peer average (26.9x).


Price to Earnings Ratio vs Industry

How does HEO's PE Ratio compare vs other companies in the North American Machinery Industry?

Price-To-Earnings vs Industry: HEO is expensive based on its Price-To-Earnings Ratio (78.7x) compared to the Canadian Machinery industry average (14.7x)


Price to Earnings Ratio vs Fair Ratio

What is HEO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HEO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio78.7x
Fair PE Ratio35.9x

Price-To-Earnings vs Fair Ratio: HEO is expensive based on its Price-To-Earnings Ratio (78.7x) compared to the estimated Fair Price-To-Earnings Ratio (35.9x).


Share Price vs Fair Value

What is the Fair Price of HEO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HEO (CA$2.2) is trading below our estimate of fair value (CA$3.81)

Significantly Below Fair Value: HEO is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


Discover undervalued companies

Future Growth

How is H2O Innovation forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


53.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HEO's forecast earnings growth (53.2% per year) is above the savings rate (1.6%).

Earnings vs Market: HEO's earnings (53.2% per year) are forecast to grow faster than the Canadian market (8% per year).

High Growth Earnings: HEO's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: HEO's revenue (8.4% per year) is forecast to grow faster than the Canadian market (6.4% per year).

High Growth Revenue: HEO's revenue (8.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HEO's Return on Equity is forecast to be low in 3 years time (9.5%).


Discover growth companies

Past Performance

How has H2O Innovation performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


47.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HEO has a large one-off loss of CA$1.6M impacting its March 31 2022 financial results.

Growing Profit Margin: HEO's current net profit margins (1.5%) are lower than last year (2.8%).


Past Earnings Growth Analysis

Earnings Trend: HEO has become profitable over the past 5 years, growing earnings by 47.9% per year.

Accelerating Growth: HEO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: HEO had negative earnings growth (-39.1%) over the past year, making it difficult to compare to the Machinery industry average (-39.1%).


Return on Equity

High ROE: HEO's Return on Equity (2.8%) is considered low.


Discover strong past performing companies

Financial Health

How is H2O Innovation's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: HEO's short term assets (CA$65.4M) exceed its short term liabilities (CA$35.9M).

Long Term Liabilities: HEO's short term assets (CA$65.4M) exceed its long term liabilities (CA$46.9M).


Debt to Equity History and Analysis

Debt Level: HEO's net debt to equity ratio (27.8%) is considered satisfactory.

Reducing Debt: HEO's debt to equity ratio has reduced from 36.3% to 35% over the past 5 years.

Debt Coverage: HEO's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: HEO's interest payments on its debt are well covered by EBIT (3.7x coverage).


Balance Sheet


Discover healthy companies

Dividend

What is H2O Innovation current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate HEO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate HEO's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if HEO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if HEO's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as HEO has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure


CEO

Frederic Dugre

22.58yrs

Tenure

CA$1,165,874

Compensation

Mr. Frederic Dugre Co-founded H2O Innovation Inc. (also known as H2O Innovation (2000) Inc) in 2000 and has also been its Chief Executive Officer and President since January 2000. Mr. Dugre served as an Ex...


CEO Compensation Analysis

Compensation vs Market: Frederic's total compensation ($USD911.18K) is above average for companies of similar size in the Canadian market ($USD695.79K).

Compensation vs Earnings: Frederic's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

Experienced Management: HEO's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Members

Experienced Board: HEO's board of directors are considered experienced (5.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 5.6%.


Top Shareholders

Company Information

H2O Innovation Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: H2O Innovation Inc.
  • Ticker: HEO
  • Exchange: TSX
  • Founded: 2000
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Implied Market Cap: CA$198.016m
  • Shares outstanding: 90.01m
  • Website: https://www.h2oinnovation.com

Number of Employees


Location

  • H2O Innovation Inc.
  • 330 rue Saint-Vallier Street East
  • Suite 340
  • Quebec City
  • Quebec
  • G1K 9C5
  • Canada

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/03/31
Annual Earnings2021/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.