We assign a fundamental rating of 6 out of 10 to HLIT. HLIT was compared to 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

In the past year HLIT was profitable.
In the past year HLIT had a positive cash flow from operations.
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's Return On Assets of 6.54% is fine compared to the rest of the industry. HLIT outperforms 79.17% of its industry peers.
The Return On Equity of HLIT (11.20%) is better than 77.08% of its industry peers.
The Return On Invested Capital of HLIT (9.21%) is better than 77.08% of its industry peers.
HLIT had an Average Return On Invested Capital over the past 3 years of 7.26%. This is below the industry average of 12.17%.
The last Return On Invested Capital (9.21%) for HLIT is above the 3 year average (7.26%), which is a sign of increasing profitability.

		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

With a decent Profit Margin value of 7.81%, HLIT is doing good in the industry, outperforming 77.08% of the companies in the same industry.
In the last couple of years the Profit Margin of HLIT has grown nicely.
Looking at the Operating Margin, with a value of 12.87%, HLIT is in the better half of the industry, outperforming 79.17% of the companies in the same industry.
HLIT's Operating Margin has improved in the last couple of years.
HLIT's Gross Margin of 55.71% is fine compared to the rest of the industry. HLIT outperforms 72.92% of its industry peers.
In the last couple of years the Gross Margin of HLIT has remained more or less at the same level.

		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
HLIT has more shares outstanding than it did 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 -0.17. This is a bad value and indicates that HLIT is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of HLIT (-0.17) is worse than 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 Debt to FCF ratio of 0.95. This is in the better half of the industry: HLIT outperforms 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 worse Debt to Equity ratio (0.27) than 60.42% of its industry peers.
Even though the debt/equity ratio score it not favorable for HLIT, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.27
Debt/FCF	0.95
Altman-Z	-0.17

ROIC/WACC0.96

WACC9.64%

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.
The Quick ratio of HLIT (1.64) is comparable to the rest of the industry.

		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

HLIT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 63.83%, which is quite impressive.
The Earnings Per Share has been growing by 23.05% on average over the past years. This is a very strong growth
HLIT shows a small growth in Revenue. In the last year, the Revenue has grown by 1.93%.
Measured over the past years, HLIT shows a quite strong growth in Revenue. The Revenue has been growing by 10.99% on average per year.

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

The Earnings Per Share is expected to grow by 11.53% on average over the next years. This is quite good.
The Revenue is expected to grow by 4.72% on average over the next years.

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

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 12.62 indicates a correct valuation of HLIT.
Compared to the rest of the industry, the Price/Earnings ratio of HLIT indicates a rather cheap valuation: HLIT is cheaper than 87.50% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.32, HLIT is valued rather cheaply.
HLIT is valuated correctly with a Price/Forward Earnings ratio of 13.05.
87.50% of the companies in the same industry are more expensive than HLIT, based on the Price/Forward Earnings ratio.
HLIT's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	12.62
Fwd PE	13.05

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, HLIT is valued a bit 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.