TSXV:HEO

Stock Analysis Report

Executive Summary

H2O Innovation Inc. provides integrated water treatment solutions based on membrane filtration technology in Canada, the United States, China, Korea, and internationally.

Snowflake

Fundamentals

Excellent balance sheet and fair value.


Similar Companies

Share Price & News

How has H2O Innovation's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-3.3%

HEO

1.6%

CA Machinery

0.2%

CA Market


1 Year Return

30.0%

HEO

-21.8%

CA Machinery

3.5%

CA Market

Return vs Industry: HEO exceeded the Canadian Machinery industry which returned -21.8% over the past year.

Return vs Market: HEO exceeded the Canadian Market which returned 3.5% over the past year.


Shareholder returns

HEOIndustryMarket
7 Day-3.3%1.6%0.2%
30 Day-4.1%-4.2%-3.3%
90 Day-0.8%-14.8%-1.9%
1 Year30.0%30.0%-19.6%-21.8%7.3%3.5%
3 Year-45.1%-45.1%2.3%-4.4%14.7%4.4%
5 Year-30.1%-30.1%23.9%14.5%26.2%7.7%

Price Volatility Vs. Market

How volatile is H2O Innovation's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is H2O Innovation undervalued compared to its fair value and its price relative to the market?

49.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HEO (CA$1.17) is trading below our estimate of fair value (CA$2.3)

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


Price To Earnings Ratio

PE vs Industry: HEO is unprofitable, so we can't compare its PE Ratio to the Machinery industry average.

PE vs Market: HEO is unprofitable, so we can't compare its PE Ratio to the Canadian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate HEO's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: HEO is good value based on its PB Ratio (1.3x) compared to the CA Machinery industry average (2x).


Next Steps

Future Growth

How is H2O Innovation forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

110.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HEO is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: HEO is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: HEO is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: HEO's revenue (9.7% per year) is forecast to grow faster than the Canadian market (5.5% per year).

High Growth Revenue: HEO's revenue (9.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if HEO's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has H2O Innovation performed over the past 5 years?

-39.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: HEO is unprofitable, and losses have increased over the past 5 years at a rate of -39.1% per year.

Accelerating Growth: Unable to compare HEO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: HEO is unprofitable, making it difficult to compare its past year earnings growth to the Machinery industry (-6.2%).


Return on Equity

High ROE: HEO has a negative Return on Equity (-4.29%), as it is currently unprofitable.


Return on Assets

ROA vs Industry: HEO is currently unprofitable, so its Return on Assets is negative.


Return on Capital Employed

ROCE Improving: HEO is currently unprofitable, so its Return on Capital Employed is negative.


Next Steps

Financial Health

How is H2O Innovation's financial position?


Financial Position Analysis

Short Term Liabilities: HEO's short term assets (CA$39.1M) exceeds its short term liabilities (CA$26.3M)

Long Term Liabilities: HEO's short term assets (39.1M) exceeds its long term liabilities (7.9M)


Debt to Equity History and Analysis

Debt Level: HEO's debt to equity ratio (31.4%) is considered satisfactory

Reducing Debt: HEO's debt to equity ratio has increased from 20.9% to 31.4% over the past 5 years.


Balance Sheet

Inventory Level: HEO has a low level of unsold assets or inventory.

Debt Coverage by Assets: HEO's debt is covered by short term assets (assets are 2.447320x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable HEO has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: HEO is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 8.6% per year.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%2.0%markettop25%5.9%industryaverage5.2%forecastin3Yearsn/a

Current dividend yield vs market & industry


Stability and Growth of Payments

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

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

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.


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of HEO's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

What is the CEO of H2O Innovation's salary, the management and board of directors tenure and is there insider trading?

4.1yrs

Average management tenure


CEO

Frédéric Dugré 0

11.3yrs

Tenure

CA$628,844

Compensation

Mr. Frédéric Dugré Co-founded H2O Innovation Inc. (also known as H2O Innovation (2000) Inc) and has also been its Chief Executive Officer and President since July 10, 2008. Mr. Dugré served as an Executive ...


CEO Compensation Analysis

Compensation vs. Market: Frédéric's total compensation ($USD480.56K) is about average for companies of similar size in the Canadian market ($USD135.83K).

Compensation vs Earnings: Frédéric's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

4.1yrs

Average Tenure

Experienced Management: HEO's management team is considered experienced (4.1 years average tenure).


Board Age and Tenure

1.8yrs

Average Tenure

Experienced Board: HEO's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

BuyCA$100,01505 Dec 18
Robert Comeau
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares120,500
Max PriceCA$0.83
BuyCA$1,999,96905 Dec 18
Investissement Quebec, Asset Management Arm
EntityCompany
Shares2,409,600
Max PriceCA$0.83
BuyCA$164,54704 Dec 18
Richard Hoel
EntityIndividual
Role
Vice Chairman
Independent Vice Chairman of the Board
Shares198,250
Max PriceCA$0.83
BuyCA$100,01504 Dec 18
Côté Membrane Separation Ltd.
EntityCompany
Shares120,500
Max PriceCA$0.83

Ownership Breakdown


Management Team

  • Frédéric Dugré

    Co-Founder

    • Tenure: 11.3yrs
    • Compensation: CA$628.84k
  • Marc Blanchet

    Chief Financial Officer

    • Tenure: 4.1yrs
    • Compensation: CA$373.01k
  • Guillaume Clairet

    Chief Operating Officer

    • Tenure: 4.1yrs
    • Compensation: CA$390.30k
  • Edith Allain

    Secretary

    • Tenure: 0yrs

Board Members

  • Richard Hoel (71yo)

    Independent Vice Chairman of the Board

    • Tenure: 0.9yrs
    • Compensation: CA$42.81k
  • Robert Comeau (58yo)

    Independent Director

    • Tenure: 1.8yrs
    • Compensation: CA$57.15k
  • Pierre Côté

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: CA$40.81k
  • Frédéric Dugré

    Co-Founder

    • Tenure: 11.3yrs
    • Compensation: CA$628.84k
  • René Vachon

    Independent Director

    • Tenure: 0.3yrs
    • Compensation: CA$2.00k
  • Lisa Henthorne

    Independent Chairman of the Board

    • Tenure: 0.9yrs
    • Compensation: CA$58.56k
  • Steven Davis

    Independent Director

    • Tenure: 2.3yrs
    • Compensation: CA$37.00k

Company Information

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


Key Information

  • Name: H2O Innovation Inc.
  • Ticker: HEO
  • Exchange: TSXV
  • Founded: 2000
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: CA$65.391m
  • Shares outstanding: 55.89m
  • 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

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HEOTSXV (TSX Venture Exchange)YesCommon SharesCACADNov 1995
H3O1DB (Deutsche Boerse AG)YesCommon SharesDEEURNov 1995
ALHEOENXTPA (Euronext Paris)YesCommon SharesFREURNov 1995
HEOF.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDNov 1995

Biography

H2O Innovation Inc. provides integrated water treatment solutions based on membrane filtration technology in Canada, the United States, China, Korea, and internationally. The company operates through three ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/23 00:04
End of Day Share Price2019/10/22 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.