Taking everything into account, HLIT scores 6 out of 10 in our fundamental rating. 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 has a correct valuation and a medium 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.
HLIT had positive earnings in 4 of the past 5 years.
HLIT had a positive operating cash flow in each of the past 5 years.

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.
HLIT has a Return On Equity of 11.20%. This is in the better half of the industry: HLIT outperforms 77.08% of its industry peers.
With a decent Return On Invested Capital value of 9.21%, HLIT is doing good in the industry, outperforming 77.08% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for HLIT 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

HLIT has a Profit Margin of 7.81%. This is in the better half of the industry: HLIT outperforms 77.08% of its industry peers.
HLIT's Profit Margin has improved in the last couple of years.
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 has a Gross Margin of 55.71%. This is in the better half 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

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), HLIT is destroying value.
HLIT has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, HLIT has more shares outstanding
HLIT has a better debt/assets ratio than last year.

2.2 Solvency

Based on the Altman-Z score of -0.14, we must say that HLIT is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of HLIT (-0.14) is worse than 66.67% of its industry peers.
HLIT has a debt to FCF ratio of 0.95. This is a very positive value and a sign of high solvency as it would only need 0.95 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 0.95, HLIT is doing good in the industry, outperforming 77.08% of the companies in the same industry.
HLIT has a Debt/Equity ratio of 0.27. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.27, HLIT is doing worse than 60.42% of the companies in the same industry.
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	-0.14

ROIC/WACC0.95

WACC9.65%

2.3 Liquidity

A Current Ratio of 2.08 indicates that HLIT has no problem at all paying its short term obligations.
The Current ratio of HLIT (2.08) is comparable to the rest of the industry.
HLIT has a Quick Ratio of 1.64. This is a normal value and indicates that HLIT is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.64, HLIT is in line with its industry, outperforming 54.17% of the companies in the same 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

The Earnings Per Share has grown by an impressive 63.83% over the past year.
HLIT shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 23.05% yearly.
HLIT shows a small growth in Revenue. In the last year, the Revenue has grown by 1.93%.
HLIT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.99% yearly.

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

Based on estimates for the next years, HLIT will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.53% on average per year.
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

HLIT is valuated correctly with a Price/Earnings ratio of 12.62.
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 28.39, HLIT is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 13.05, the valuation of HLIT can be described as correct.
Compared to the rest of the industry, the Price/Forward Earnings ratio of HLIT indicates a rather cheap valuation: HLIT is cheaper than 87.50% of the companies listed in the same industry.
HLIT is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.72, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	12.62
Fwd PE	13.05

4.2 Price Multiples

HLIT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. HLIT is cheaper than 75.00% 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.