A Fresh Look at Hillman Solutions (HLMN) Valuation After Q3 Earnings and Share Buyback Progress

Hillman Solutions (HLMN) just posted third quarter earnings that showed a clear jump in both sales and net income compared to last year. The company also completed a tranche of its ongoing share buyback plan.

See our latest analysis for Hillman Solutions.

Hillman Solutions’ latest financial results brought a burst of investor attention, but that momentum has not reversed the stock’s bigger-picture trend. While the company surprised with robust third quarter numbers and follow-through on its buyback plan, the share price has slipped in recent months. This has contributed to a 1-year share price return of -6.61% and a notable 1-year total shareholder return of -21.54%. Even so, the stock’s three-year total shareholder return of 4.3% reminds investors that patience sometimes pays off, especially when management is focused on delivering growth and returning value.

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With analyst targets still well above the current share price and fresh evidence of earnings growth, investors may be wondering whether Hillman Solutions now represents an undervalued opportunity or if the market is already factoring in its full potential.

Most Popular Narrative: 28.9% Undervalued

Hillman Solutions’ most popular narrative places its fair value noticeably above the recent closing price, highlighting room for a significant re-rating if key assumptions are realized.

Continued growth in residential repair and remodeling spend, driven by the aging US housing stock, is expected to provide Hillman with a stable and recurring revenue base. This is seen as supporting steady top-line growth regardless of fluctuations in new home sales or broader economic cycles.

Read the complete narrative.

Want to know the growth blueprint behind this high valuation? The key element is aggressive expansion in high-recurring revenue channels, but there is a catch in how future profit margins are forecast. Curious which major assumptions could swing valuation outcomes? See what is fueling these optimistic numbers in the full narrative.

Result: Fair Value of $12.31 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in core demand or increased pressure from major retail partners could undermine the margin expansion that is central to the bullish narrative.

Find out about the key risks to this Hillman Solutions narrative.

Another View: What Do The Ratios Say?

While our earlier narrative pointed to Hillman Solutions being undervalued, the latest price-to-earnings ratio stands at 46.1 times, which is much higher than both the industry average of 23.8 times and the peer average of 30.6 times. Even compared to the market’s fair ratio of 33.2 times, the stock looks expensive on this basis. This sizable gap suggests investors are paying up for growth. Are expectations running too high, or is there something analysts see that the market is missing?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Hillman Solutions Narrative

If you have a different perspective or want to test your own thesis, it's quick and easy to dive in and build your own view in just a few minutes. Do it your way

A great starting point for your Hillman Solutions research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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