H2O Innovation Inc (HEO.CA) Stock Fundamental Analysis
TSX:HEO - Toronto Stock Exchange - CA4433003064 - Common Stock - Currency: CAD
We assign a fundamental rating of 4 out of 10 to HEO. HEO was compared to 20 industry peers in the Machinery industry. The financial health of HEO is average, but there are quite some concerns on its profitability. HEO is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
HEO had positive earnings in the past year.
In the past year HEO had a positive cash flow from operations.
In multiple years HEO reported negative net income over the last 5 years.
HEO had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
HEO has a Return On Assets (-0.80%) which is in line with its industry peers.
The Return On Equity of HEO (-1.72%) is better than 76.67% of its industry peers.
HEO has a Return On Invested Capital (2.50%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for HEO is significantly below the industry average of 10.00%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.8% | ||
| ROE | -1.72% | ||
| ROIC | 2.5% |
ROA(3y)1.38%
ROA(5y)-0.38%
ROE(3y)2.63%
ROE(5y)-0.51%
ROIC(3y)3.1%
ROIC(5y)2.79%
1.3 Margins
With a Operating Margin value of 2.38%, HEO perfoms like the industry average, outperforming 56.67% of the companies in the same industry.
HEO's Operating Margin has declined in the last couple of years.
HEO has a Gross Margin (25.48%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of HEO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 2.38% | ||
| PM (TTM) | N/A | ||
| GM | 25.48% |
OM growth 3Y-11.23%
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-2.13%
GM growth 5Y2.59%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), HEO is destroying value.
HEO has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, HEO has more shares outstanding
The debt/assets ratio for HEO is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.27 indicates that HEO is not in any danger for bankruptcy at the moment.
HEO has a better Altman-Z score (3.27) than 86.67% of its industry peers.
The Debt to FCF ratio of HEO is 4.52, which is a neutral value as it means it would take HEO, 4.52 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 4.52, HEO belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
A Debt/Equity ratio of 0.71 indicates that HEO is somewhat dependend on debt financing.
HEO has a worse Debt to Equity ratio (0.71) than 63.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 4.52 | ||
| Altman-Z | 3.27 |
ROIC/WACC0.31
WACC8.01%
2.3 Liquidity
HEO has a Current Ratio of 2.10. This indicates that HEO is financially healthy and has no problem in meeting its short term obligations.
HEO has a Current ratio of 2.10. This is in the better half of the industry: HEO outperforms 63.33% of its industry peers.
A Quick Ratio of 1.50 indicates that HEO should not have too much problems paying its short term obligations.
With a decent Quick ratio value of 1.50, HEO is doing good in the industry, outperforming 76.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.1 | ||
| Quick Ratio | 1.5 |
3. Growth
3.1 Past
HEO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 2852.38%, which is quite impressive.
Looking at the last year, HEO shows a very strong growth in Revenue. The Revenue has grown by 26.89%.
HEO shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.50% yearly.
EPS 1Y (TTM)2852.38%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%6900%
Revenue 1Y (TTM)26.89%
Revenue growth 3Y23.77%
Revenue growth 5Y20.5%
Sales Q2Q%5.65%
3.2 Future
HEO is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 39.90% yearly.
Based on estimates for the next years, HEO will show a small growth in Revenue. The Revenue will grow by 7.73% on average per year.
EPS Next Y-26.68%
EPS Next 2Y35.39%
EPS Next 3Y51.34%
EPS Next 5Y39.9%
Revenue Next Year8.64%
Revenue Next 2Y8.92%
Revenue Next 3Y8.18%
Revenue Next 5Y7.73%
3.3 Evolution
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 70.83 indicates a quite expensive valuation of HEO.
The rest of the industry has a similar Price/Earnings ratio as HEO.
HEO's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 28.87.
HEO is valuated quite expensively with a Price/Forward Earnings ratio of 42.08.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HEO is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.38, HEO is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 70.83 | ||
| Fwd PE | 42.08 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HEO is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, HEO is valued cheaply inside the industry as 83.33% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.57 | ||
| EV/EBITDA | 24.2 |
4.3 Compensation for Growth
HEO's earnings are expected to grow with 51.34% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y35.39%
EPS Next 3Y51.34%
5. Dividend
5.1 Amount
No dividends for HEO!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
TSX:HEO (12/11/2023, 7:00:00 PM)
4.25
+0.01 (+0.24%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners5.62%
Inst Owner ChangeN/A
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap382.53M
Analysts77.5
Price Target4.14 (-2.59%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-103.3%
Min EPS beat(2)-199.01%
Max EPS beat(2)-7.59%
EPS beat(4)2
Avg EPS beat(4)-15.35%
Min EPS beat(4)-199.01%
Max EPS beat(4)129.7%
EPS beat(8)3
Avg EPS beat(8)-52.64%
EPS beat(12)4
Avg EPS beat(12)-47.8%
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)0.31%
Min Revenue beat(2)-6.48%
Max Revenue beat(2)7.1%
Revenue beat(4)3
Avg Revenue beat(4)5.01%
Min Revenue beat(4)-6.48%
Max Revenue beat(4)12.89%
Revenue beat(8)7
Avg Revenue beat(8)7.55%
Revenue beat(12)9
Avg Revenue beat(12)4.75%
Revenue beat(16)11
Avg Revenue beat(16)3.88%
PT rev (1m)-1.52%
PT rev (3m)8.65%
EPS NQ rev (1m)-50%
EPS NQ rev (3m)-50%
EPS NY rev (1m)-52.54%
EPS NY rev (3m)-57.58%
Revenue NQ rev (1m)-3.44%
Revenue NQ rev (3m)96282.1%
Revenue NY rev (1m)-1.24%
Revenue NY rev (3m)-0.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 70.83 | ||
| Fwd PE | 42.08 | ||
| P/S | 1.49 | ||
| P/FCF | 23.57 | ||
| P/OCF | 13.21 | ||
| P/B | 3.8 | ||
| P/tB | 19.82 | ||
| EV/EBITDA | 24.2 |
EPS(TTM)0.06
EY1.41%
EPS(NY)0.1
Fwd EY2.38%
FCF(TTM)0.18
FCFY4.24%
OCF(TTM)0.32
OCFY7.57%
SpS2.85
BVpS1.12
TBVpS0.21
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.8% | ||
| ROE | -1.72% | ||
| ROCE | 3.48% | ||
| ROIC | 2.5% | ||
| ROICexc | 2.62% | ||
| ROICexgc | 5.07% | ||
| OM | 2.38% | ||
| PM (TTM) | N/A | ||
| GM | 25.48% | ||
| FCFM | 6.33% |
ROA(3y)1.38%
ROA(5y)-0.38%
ROE(3y)2.63%
ROE(5y)-0.51%
ROIC(3y)3.1%
ROIC(5y)2.79%
ROICexc(3y)3.48%
ROICexc(5y)3.12%
ROICexgc(3y)9.07%
ROICexgc(5y)8.2%
ROCE(3y)4.31%
ROCE(5y)3.95%
ROICexcg growth 3Y-16.5%
ROICexcg growth 5YN/A
ROICexc growth 3Y-9.09%
ROICexc growth 5YN/A
OM growth 3Y-11.23%
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-2.13%
GM growth 5Y2.59%
F-Score3
Asset Turnover1.18
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 4.52 | ||
| Debt/EBITDA | 3.85 | ||
| Cap/Depr | 102.5% | ||
| Cap/Sales | 4.96% | ||
| Interest Coverage | 1.17 | ||
| Cash Conversion | 156.32% | ||
| Profit Quality | N/A | ||
| Current Ratio | 2.1 | ||
| Quick Ratio | 1.5 | ||
| Altman-Z | 3.27 |
F-Score3
WACC8.01%
ROIC/WACC0.31
Cap/Depr(3y)72.35%
Cap/Depr(5y)56.15%
Cap/Sales(3y)3.58%
Cap/Sales(5y)2.75%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)2852.38%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%6900%
EPS Next Y-26.68%
EPS Next 2Y35.39%
EPS Next 3Y51.34%
EPS Next 5Y39.9%
Revenue 1Y (TTM)26.89%
Revenue growth 3Y23.77%
Revenue growth 5Y20.5%
Sales Q2Q%5.65%
Revenue Next Year8.64%
Revenue Next 2Y8.92%
Revenue Next 3Y8.18%
Revenue Next 5Y7.73%
EBIT growth 1Y14.42%
EBIT growth 3Y9.86%
EBIT growth 5YN/A
EBIT Next Year216.17%
EBIT Next 3Y64.91%
EBIT Next 5Y39.36%
FCF growth 1Y485.92%
FCF growth 3Y19.42%
FCF growth 5YN/A
OCF growth 1Y541.91%
OCF growth 3Y32.99%
OCF growth 5YN/A