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HLIO

Helios Technologies NYSE:HLIO Stock Report

Last Price

US$66.97

Market Cap

US$2.2b

7D

0.5%

1Y

-15.1%

Updated

18 Aug, 2022

Data

Company Financials +
HLIO fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance5/6
Financial Health3/6
Dividends0/6

HLIO Stock Overview

Helios Technologies, Inc., together with its subsidiaries, develops, manufactures, and sells solutions for the hydraulics and electronics markets in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

Helios Technologies, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Helios Technologies
Historical stock prices
Current Share PriceUS$66.97
52 Week HighUS$114.89
52 Week LowUS$59.17
Beta1.13
1 Month Change7.05%
3 Month Change2.86%
1 Year Change-15.11%
3 Year Change65.40%
5 Year Change45.59%
Change since IPO2,078.54%

Recent News & Updates

Aug 17
Helios Technologies, Inc.'s (NYSE:HLIO) Intrinsic Value Is Potentially 68% Above Its Share Price

Helios Technologies, Inc.'s (NYSE:HLIO) Intrinsic Value Is Potentially 68% Above Its Share Price

Does the August share price for Helios Technologies, Inc. ( NYSE:HLIO ) reflect what it's really worth? Today, we will...

Aug 02
Does Helios Technologies (NYSE:HLIO) Have A Healthy Balance Sheet?

Does Helios Technologies (NYSE:HLIO) Have A Healthy Balance Sheet?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Jul 31

Helios Technologies: Augmented Strategy Realizing Profits

Helios had an aggressive sell-off since the end of 2021 which has resulted in a possible buying opportunity. I share my bull case for HLIO stock. The headwinds could be significant but it all depends if Helios' new leadership team can execute on their strategy. Thesis Helios Technologies (HLIO) has sold off aggressively since the start of the year for good reasons. Supply chain issues are causing a rise in costs. These issues impact their ability to deliver on time to customers. Helios have an ambitious target of $1bn in revenue by 2023. They are on their way to that target with healthy profit margins. Helios' price fell from its high of $109.95 in November to $62.97 on 21 July 2022. I present a bull case for Helios as there seems to be a unique buying opportunity for this stock before its earnings announcement on 8 August. Helios Technologies Overview Helios Technologies, Inc. engages in the development and manufacture of motion control and electronic controls technology for diverse end markets, including construction, material handling, agriculture, energy, recreational vehicles, marine, health, and wellness. It operates through the Hydraulics and Electronics segments. The Hydraulics segment provides screw-in hydraulic cartridge valves, manifolds, and integrated fluid power packages and subsystems used in hydraulic systems. The Electronics segment provides electronic control, display, and instrumentation solutions for recreational and off-highway vehicles and stationary and power generation equipment. Segment Finances: Hydraulics Helios Technologies - Q1 2022 Report Helios have shown great performance showing growth and losing only 50 bps on their Operating Margin in Q1. Geographically, APAC is lagging but significant growth in Americas and EMEA could be seen as more sustainable. Segment Finances: Electronics Helios Technologies - Q1 2022 Report The growth in the Electronics division was great across all regions. Inflationary and supply chain pressures are clearly coming through as they are losing Gross and Operating Margin. Most of this growth comes from their health and wellness and recreational end-markets. Acquisitions Crunchbase - Latest Helios Acquisitions In trying to achieve their augmented strategy, Helios have done 3 acquisitions in the last 2 years. Two of these acquisitions had no disclosed price but the Balboa deal was done with $16 million in cash and the rest through a credit agreement. This brings into question their net assets positions and if their debt ratios are still healthy. Simply Wall St - Debt to Equity Ratio Helios' debt to equity ratio has increased gradually over the last 3 years. Usually, debt to equity ratio below 1 is considered good. Their operating cash flows also cover 25% of their debt and their interest cover ratio is at 10.3 times. This helps me believe that the leadership team has been thoughtful around acquisitions. This will bode well for future revenue and earnings. Growing Revenue and Healthy Profit Margins The ride in 2022 has been volatile. Helios' share price at $62 is still significantly higher than pre-COVID levels. The PE ratio has normalized coming from highs of 120 in 2020 to 18 today. This has materialized while revenue has steadily been increasing. But analysts do not believe that Helios will be achieving its $1 billion revenue target by 2023. Even during significant management changes, they have grown their revenue year on year. Their profit margins remain in a healthy range of 10% to 15%. Simply Wall St - Earnings & Revenue Growth Valuation Comps - Peer Set Simply Wall St - Past Earnings Growth Analysis To maintain the high PE Ratio, we saw in 2020 that Helios had to bring significant revenue growth to the table. The fact that they have been consistent performers makes me believe that they can deliver on the necessary growth. Their performance in the last year has been phenomenal compared to the industry - which explains the rally in its share price toward the end of 2021. It would be up to this management team to execute the augmented strategy. The strategy aims to realize the $1 billion target 2 years earlier than planned in 2023. Simply Wall St - PE Ratio vs Peers Helios is forecasting earnings growth of 7.3%. It would be difficult to maintain the high multiples seen during COVID for a forecasted growth of 7.3%. Some of the companies similar in market cap and industry are: Mueller Water Products, Inc. (MWA) - It is one of North America's largest manufacturers and distributors of fire hydrants, gate valves, and other water infrastructure products. Kadant Inc. (KAI) – It is a global supplier of critical components and engineered systems used in process industries worldwide. Hillenbrand Inc. (HI) - The firm engages in the development, manufacture, and sale of engineered industrial equipment. Mueller Industries Inc. (MLI) - Engages in the manufacture of copper, brass, aluminum, and plastic products. I believe Helios is overpriced compared to peers. Looking at the below analysis, we need to corroborate this valuation further by comparing it to the industry and performing a discounted free cash flow model. Simply Wall St - PE Ratio vs Industry Compared to the entire US Machinery Industry, I believe Helios is undervalued. Companies like RBC Bearings (ROLL) and Chart Industries (GTLS) have 60+ PE ratios. This would indicate that the market believes high growth can be obtained from this industry. The larger market cap companies in the industry are around the 21 PE Ratio mark. This puts Helios' PE ratio in more perspective. In my opinion, this would indicate that the company is undervalued. Because they are in a niche market, their growth opportunities might not be as broad as those for RBC Bearings, which has shown 3x revenue growth in a year. With Helios being around for a much longer time than RBC Bearings it would be better to compare the Helios PE Ratio to their peers and the industry. They are slightly overvalued compared to peers and undervalued based on industry comparison. Based on the PE ratio versus industry and competitors, I have assessed that they are fairly valued. Let’s jump into the free cash flow discounted model. HLIO Stock Valuation (by Free Cash Flow Model) My favorite valuation is hands down the discounted free cash flow model. The PE ratio analysis is good when assessing whether a stock is over or underpriced relative to other listed companies. This valuation method looks at growth factors and discounts with an appropriate discount rate. The calculations below outline how an intrinsic value for Helios Technologies is arrived at. By discounting future cash flows to their present value using the 2-stage method. We use analysts' estimates of cash flows going forward 10 years for the first stage. The second stage assumes the company grows at a stable rate into perpetuity. All values are in USD where a currency amount is calculated. Data Point Source Value Valuation Model 2 Stage Free Cash Flow to Equity Levered Free Cash Flow Average of 5 Analyst Estimates (S&P Global) See below Discount Rate (Cost of Equity) See below 8.29% Perpetual Growth Rate 5-Year Average of US Long-Term Govt Bond Rate 3.74% Data Point Calculation/ Source Result Risk-Free Rate 5-Year Average of US Long-Term Govt Bond Rate 3.74% Equity Risk Premium S&P Global 4.20% Machinery Unlevered Beta Simply Wall St/ S&P Global 0.96 Re-levered Beta = 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))] 1.084 = 0.33 + [(0.66 * 0.958) * (1 + (1 - 21.0%) (22.17%))] Levered Beta Levered Beta limited to 0.8 to 2.0 1.084 (practical range for a stable firm) Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium) 8.29%

Shareholder Returns

HLIOUS MachineryUS Market
7D0.5%1.4%1.4%
1Y-15.1%-6.9%-8.4%

Return vs Industry: HLIO underperformed the US Machinery industry which returned -8.8% over the past year.

Return vs Market: HLIO underperformed the US Market which returned -9% over the past year.

Price Volatility

Is HLIO's price volatile compared to industry and market?
HLIO volatility
HLIO Average Weekly Movement6.5%
Machinery Industry Average Movement5.8%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: HLIO is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: HLIO's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19702,350Joe Matosevichttps://www.heliostechnologies.com

Helios Technologies, Inc., together with its subsidiaries, develops, manufactures, and sells solutions for the hydraulics and electronics markets in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Hydraulics and Electronics. The Hydraulics segment offers cartridge valve technology products to control rates and direction of fluid flow, and to regulate and control pressures for industrial and mobile applications; quick release coupling solutions for the agriculture, construction equipment, and industrial markets; and hydraulic system design that provides engineered solutions for machine users, manufacturers, or designers.

Helios Technologies, Inc. Fundamentals Summary

How do Helios Technologies's earnings and revenue compare to its market cap?
HLIO fundamental statistics
Market CapUS$2.18b
Earnings (TTM)US$111.83m
Revenue (TTM)US$923.14m

19.5x

P/E Ratio

2.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HLIO income statement (TTM)
RevenueUS$923.14m
Cost of RevenueUS$600.75m
Gross ProfitUS$322.40m
Other ExpensesUS$210.57m
EarningsUS$111.83m

Last Reported Earnings

Jul 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.44
Gross Margin34.92%
Net Profit Margin12.11%
Debt/Equity Ratio55.8%

How did HLIO perform over the long term?

See historical performance and comparison

Dividends

0.5%

Current Dividend Yield

10%

Payout Ratio