Helios Technologies Inc (HLIO, Financial) has recently faced a notable decline, with a daily loss of 5.29% and a substantial 3-month loss of 32.31%. Despite these figures, the company maintains an Earnings Per Share (EPS) of 1.58. Investors are now faced with the critical question: Is Helios Technologies significantly undervalued? To address this query, we delve into a detailed valuation analysis that may reveal the stock's true potential.
Company Introduction
Helios Technologies Inc is a prominent player in the industrial technology sphere, operating primarily within the hydraulics and electronics markets. With a diverse portfolio that includes hydraulic valves, couplings, and electronic control systems, Helios Technologies stands as a testament to innovation and quality. The stock's current price of $39.05 appears modest when juxtaposed with the GF Value of $69.32, suggesting a potential undervaluation. This juxtaposition sets the stage for an in-depth exploration of the company's intrinsic value.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, crafted by GuruFocus. It incorporates historical trading multiples, an adjustment factor based on past performance, and future business projections. When a stock's price significantly deviates from the GF Value Line, it suggests either overvaluation or undervaluation, with corresponding implications for future returns. At a market cap of $1.30 billion, Helios Technologies (HLIO, Financial) is currently considered significantly undervalued, indicating the potential for higher long-term returns relative to its business growth.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Investing in a company with robust financial strength is crucial to minimize the risk of permanent loss. Helios Technologies' cash-to-debt ratio of 0.07 places it in a challenging position within the Industrial Products industry. With an overall financial strength rating of 5 out of 10, Helios Technologies presents a fair financial standing, warranting careful consideration from investors.
Profitability and Growth
The consistent profitability of Helios Technologies over the past decade underscores its investment appeal. With a revenue of $838.20 million and an operating margin surpassing many of its industry peers, the company's profitability rank stands at a robust 8 out of 10. In terms of growth, Helios Technologies' revenue and EBITDA growth rates are commendable, further solidifying its position in the market.
Return on Invested Capital vs. Weighted Average Cost of Capital
The comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) is pivotal for assessing value creation. Helios Technologies' ROIC of 5.36 is currently below its WACC of 10.76, suggesting challenges in generating cash flow relative to the capital invested.
Conclusion
In summary, Helios Technologies (HLIO, Financial) is believed to be significantly undervalued. The company exhibits fair financial health and robust profitability, with growth rates that are competitive within the Industrial Products industry. For a thorough understanding of Helios Technologies' financial journey, interested parties are encouraged to examine its 30-Year Financials here.
To discover high-quality companies that may deliver above-average returns, please visit the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
