Overall HLIT gets a fundamental rating of 6 out of 10. We evaluated HLIT against 48 industry peers in the Communications Equipment industry. While HLIT has a great profitability rating, there are some minor concerns on its financial health. HLIT is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

HLIT had positive earnings in the past year.
HLIT had a positive operating cash flow in the past year.
Of the past 5 years HLIT 4 years were profitable.
Each year in the past 5 years HLIT had a positive operating cash flow.

1.2 Ratios

HLIT has a better Return On Assets (6.54%) than 79.17% of its industry peers.
HLIT has a better Return On Equity (11.20%) than 77.08% of its industry peers.
HLIT's Return On Invested Capital of 9.21% is fine compared to the rest of the industry. HLIT outperforms 77.08% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HLIT is below the industry average of 12.17%.
The 3 year average ROIC (7.26%) for HLIT is below the current ROIC(9.21%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	6.54%
ROE	11.2%
ROIC	9.21%

ROA(3y)6.61%

ROA(5y)3.36%

ROE(3y)12.12%

ROE(5y)5.9%

ROIC(3y)7.26%

ROIC(5y)N/A

1.3 Margins

The Profit Margin of HLIT (7.81%) is better than 77.08% of its industry peers.
In the last couple of years the Profit Margin of HLIT has grown nicely.
HLIT has a Operating Margin of 12.87%. This is in the better half of the industry: HLIT outperforms 79.17% of its industry peers.
HLIT's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 55.71%, HLIT is in the better half of the industry, outperforming 72.92% of the companies in the same industry.
HLIT's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	12.87%
PM (TTM)	7.81%
GM	55.71%

OM growth 3Y52.34%

OM growth 5Y25.49%

PM growth 3Y30.12%

PM growth 5YN/A

GM growth 3Y1.69%

GM growth 5Y-0.62%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

HLIT has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, HLIT has more shares outstanding
The number of shares outstanding for HLIT has been increased compared to 5 years ago.
Compared to 1 year ago, HLIT has an improved debt to assets ratio.

2.2 Solvency

HLIT has an Altman-Z score of -0.05. This is a bad value and indicates that HLIT is not financially healthy and even has some risk of bankruptcy.
HLIT's Altman-Z score of -0.05 is on the low side compared to the rest of the industry. HLIT is outperformed by 66.67% of its industry peers.
The Debt to FCF ratio of HLIT is 0.95, which is an excellent value as it means it would take HLIT, only 0.95 years of fcf income to pay off all of its debts.
HLIT has a better Debt to FCF ratio (0.95) than 77.08% of its industry peers.
A Debt/Equity ratio of 0.27 indicates that HLIT is not too dependend on debt financing.
HLIT has a Debt to Equity ratio of 0.27. This is in the lower half of the industry: HLIT underperforms 60.42% of its industry peers.
Although HLIT does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.27
Debt/FCF	0.95
Altman-Z	-0.05

ROIC/WACC0.96

WACC9.59%

2.3 Liquidity

A Current Ratio of 2.08 indicates that HLIT has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 2.08, HLIT is in line with its industry, outperforming 54.17% of the companies in the same industry.
A Quick Ratio of 1.64 indicates that HLIT should not have too much problems paying its short term obligations.
HLIT has a Quick ratio of 1.64. This is comparable to the rest of the industry: HLIT outperforms 54.17% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.08
Quick Ratio	1.64

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 63.83% over the past year.
The Earnings Per Share has been growing by 23.05% on average over the past years. This is a very strong growth
The Revenue has been growing slightly by 1.93% in the past year.
The Revenue has been growing by 10.99% on average over the past years. This is quite good.

EPS 1Y (TTM)63.83%

EPS 3Y32.45%

EPS 5Y23.05%

EPS Q2Q%-53.85%

Revenue 1Y (TTM)1.93%

Revenue growth 3Y10.2%

Revenue growth 5Y10.99%

Sales Q2Q%-27.26%

3.2 Future

HLIT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.53% yearly.
Based on estimates for the next years, HLIT will show a small growth in Revenue. The Revenue will grow by 4.72% on average per year.

EPS Next Y-44.65%

EPS Next 2Y-2.89%

EPS Next 3Y11.53%

EPS Next 5YN/A

Revenue Next Year-17.27%

Revenue Next 2Y0.37%

Revenue Next 3Y4.72%

Revenue Next 5YN/A

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
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.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 13.31, which indicates a correct valuation of HLIT.
83.33% of the companies in the same industry are more expensive than HLIT, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of HLIT to the average of the S&P500 Index (28.87), we can say HLIT is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 13.76, the valuation of HLIT can be described as correct.
Based on the Price/Forward Earnings ratio, HLIT is valued cheaper than 83.33% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.96, HLIT is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	13.31
Fwd PE	13.76

4.2 Price Multiples

HLIT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. HLIT is cheaper than 77.08% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HLIT indicates a rather cheap valuation: HLIT is cheaper than 93.75% of the companies listed in the same industry.