Why Helios Technologies, Inc. (NYSE:HLIO) Could Be Worth Watching

By
Simply Wall St
Published
May 12, 2022
NYSE:HLIO
Source: Shutterstock

Helios Technologies, Inc. (NYSE:HLIO), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$81.11 and falling to the lows of US$65.15. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Helios Technologies' current trading price of US$65.15 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Helios Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Helios Technologies

What is Helios Technologies worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Helios Technologies’s ratio of 18.77x is trading slightly below its industry peers’ ratio of 20.81x, which means if you buy Helios Technologies today, you’d be paying a decent price for it. And if you believe Helios Technologies should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Helios Technologies’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Helios Technologies generate?

earnings-and-revenue-growth
NYSE:HLIO Earnings and Revenue Growth May 12th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 47% over the next couple of years, the future seems bright for Helios Technologies. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? HLIO’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at HLIO? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on HLIO, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for HLIO, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Helios Technologies, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Helios Technologies, and understanding it should be part of your investment process.

If you are no longer interested in Helios Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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