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The Hackett Group (HCKT)
NASDAQ:HCKT
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The Hackett Group
(NASDAQ:HCKT)
75Outperform
Positive Factors
Earnings
The company reported non-GAAP EPS of $0.47, which exceeded forecasted values, driven by revenue and adjusted EBITDA margin overages.
Financial Performance
The company's top line exceeds forecasts with total net revenue beating both individual and consensus forecasts by 4%.
Investment Rating
The company is maintaining its OUTPERFORM investment rating and has increased its 12-month price target from $28 to $36.
Negative Factors
Earnings Forecast
The company's expected year-over-year growth of 8% in the second half of 2024 and 5% in 2025 in the Oracle Solutions business may not meet aggressive growth expectations.
Revenue Growth
Year-over-year net revenue growth is expected to accelerate from 3% in 2024 to 6% in 2025, indicating slower growth in the current year.
The Hackett Group (HCKT) vs. S&P 500 (SPY)
Market Cap
$806.46M
Dividend Yield1.51%
Average Volume (3M)139.75K
Price to Earnings (P/E)27.7
Beta (1Y)1.11
Revenue Growth5.82%
EPS Growth-14.46%
CountryUS
Employees1,478
SectorTechnology
Sector Strength43
IndustryInformation Technology Services
Share Statistics
EPS (TTM)1.06
Shares Outstanding27,647,034
10 Day Avg. Volume124,977
30 Day Avg. Volume139,749
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.53
Price to Cash Flow (P/CF)9.60
P/FCF Ratio9.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$35.67Price Target Upside22.28% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
The Hackett Group Business Overview & Revenue Model
Company DescriptionThe Hackett Group, Inc. operates as a strategic advisory and technology consulting firm primarily in North America and internationally. It offers best practice intelligence center, an online searchable repository; best practice accelerators that provide web-based access to best practices, customized software configuration tools, and best practice process flows; advisor inquiry for access to fact-based advice on proven approaches and methods; best practice research that provides insights into the proven approaches; and peer interaction comprising member-led webcasts, annual best practice conferences, annual member forums, membership performance surveys, and client-submitted content, as well as intellectual property as-a-service and Hackett Institute programs. The company's benchmarking services conduct studies for selling, general and administrative, finance, human resources, information technology, procurement, enterprise performance management, and shared services; and business transformation practices to help clients develop coordinated strategy for achieving performance enhancements across the enterprise. It also provides Oracle EEA solutions for core financial close and consolidation, integrated business planning, and reporting/advanced analytics areas. In addition, the company offers SAP solutions, including planning, architecture, and vendor evaluation and selection through implementation, customization, testing, and integration; post-implementation support, change management, exception management, process transparency, system documentation, and end-user training; off-shore application development, and application maintenance and support services; and OneStream practice that helps clients choose and deploy OneStream XF Platform and Market Place solutions. The company was formerly known as Answerthink, Inc. and changed its name to The Hackett Group, Inc. in 2008. The Hackett Group, Inc. was founded in 1991 and is headquartered in Miami, Florida.
How the Company Makes MoneyThe Hackett Group generates revenue through a combination of consulting services and proprietary research and benchmarking services. Its primary revenue stream comes from providing strategic advisory and implementation services to businesses looking to enhance their operational processes and technology infrastructure. The company also earns income from licensing its intellectual property, including benchmarking data and best practices, which clients use to assess and improve their internal performance. Additionally, The Hackett Group benefits from ongoing client relationships and engagements, ensuring a steady flow of repeat business. Significant partnerships with technology providers and industry leaders enhance its service offerings and contribute to its ability to generate revenue.
The Hackett Group Financial Statement Overview
Summary
The Hackett Group showcases strong financial health with robust revenue growth, impressive cash flow generation, and effective equity utilization. Despite some margin fluctuations and asset decreases, the low leverage and consistent profitability underscore a sound financial foundation.Income Statement
The Hackett Group has demonstrated a robust revenue growth rate of 5.81% for the most recent year, coupled with healthy margins: a gross profit margin of 100% and a net profit margin of 9.44%. Despite a slight decline in EBIT and EBITDA margins compared to the previous year, the company remains profitable, with consistent growth in total revenue over the years, indicating strong market demand and operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet reflects a strong equity position with a debt-to-equity ratio of 0.03, showcasing low leverage risk. With a return on equity of 25.64%, The Hackett Group is effectively utilizing its equity to generate profits. The equity ratio stands at 60.22%, indicating a stable financial structure. However, the decrease in total assets and cash reserves warrants caution.78
Positive
Cash Flow
The Hackett Group's cash flow performance is impressive, with a free cash flow growth rate of 31.08% and a high operating cash flow to net income ratio of 1.61. The free cash flow to net income ratio of 1.47 highlights strong cash generation capabilities. Despite significant financing outflows, the company maintains positive free cash flows, which is a strong indicator of financial health.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 313.86M | 296.59M | 293.74M | 278.81M | 239.48M | Gross Profit |
| 123.24M | 116.38M | 115.58M | 105.66M | 73.11M | EBIT |
| 44.59M | 49.26M | 55.25M | 46.48M | 19.13M | EBITDA |
| 44.59M | 52.68M | 58.69M | 50.85M | 13.12M | Net Income Common Stockholders |
| 29.63M | 34.15M | 40.80M | 41.55M | 5.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 16.37M | 20.96M | 30.25M | 45.79M | 49.45M | Total Assets |
| 191.88M | 181.43M | 184.99M | 207.54M | 192.54M | Total Debt |
| 2.94M | 34.42M | 61.11M | 3.77M | 6.12M | Net Debt |
| -13.42M | 13.47M | 30.85M | -42.02M | -43.33M | Total Liabilities |
| 76.30M | 91.35M | 126.72M | 63.69M | 51.66M | Stockholders Equity |
| 115.57M | 90.08M | 58.28M | 143.85M | 140.89M |
| Cash Flow | Free Cash Flow | |||
| 43.65M | 33.30M | 54.25M | 43.11M | 42.17M | Operating Cash Flow |
| 47.73M | 37.40M | 58.90M | 46.35M | 44.06M | Investing Cash Flow |
| -10.62M | -4.10M | -4.66M | -3.24M | -1.89M | Financing Cash Flow |
| -41.66M | -42.56M | -69.74M | -46.74M | -18.71M |
The Hackett Group Technical Analysis
Positive
29.17
Price Trends
30.03
Negative
30.25
Negative
27.35
Positive
Market Momentum
-0.30
Negative
48.94
Neutral
76.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCKT, the sentiment is Positive. The current price of 29.17 is above the 20-day moving average (MA) of 28.81, below the 50-day MA of 30.03, and above the 200-day MA of 27.35, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 48.94 is Neutral, neither overbought nor oversold. The STOCH value of 76.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HCKT.
The Hackett Group Risk Analysis
The Hackett Group disclosed 22 risk factors in its most recent earnings report. The Hackett Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
The Hackett Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $2.52B | 22.64 | 21.32% | ― | 8.80% | 97.52% | |
75 Outperform | $806.46M | 27.65 | 28.82% | 1.51% | 5.82% | -14.46% | |
75 Outperform | $190.52B | 25.11 | 27.26% | 1.82% | 4.10% | 9.78% | |
75 Outperform | $32.13B | 26.09 | 122.93% | ― | 6.10% | 44.57% | |
69 Neutral | $4.03B | 68.98 | 3.19% | ― | 13.97% | -54.48% | |
64 Neutral | $5.82B | 20.74 | 13.21% | ― | 6.00% | -1.49% | |
58 Neutral | $21.03B | 10.28 | -16.29% | 2.47% | 4.45% | -23.80% |
* Technology Sector Average
Performance Comparison
HCKT
The Hackett Group
29.17
5.40
22.72%
ACN
Accenture
304.33
-29.27
-8.77%
CBZ
CBIZ
74.97
-2.89
-3.71%
FCN
FTI Consulting
162.07
-46.05
-22.13%
IT
Gartner
418.25
-59.19
-12.40%
HURN
Huron Consulting
142.30
47.07
49.43%
The Hackett Group Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -7.37% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call reveals a mix of positive developments, including exceeding guidance, significant growth in SAP Solutions, and strategic acquisition benefits, but is offset by challenges like declining Oracle segment revenues, weakness in eProcurement, and a cautious outlook for Q1 2025.Highlights
Exceeding Quarterly Guidance
Total revenues of $79.2 million and adjusted earnings per share of $0.47, both exceeding quarterly guidance.
SAP Solutions Segment Growth
SAP Solutions segment revenue increased by 51% compared to the same period in the prior year, driven by strong software-related sales.
Gen AI Revenue Growth
Revenues from Gen AI consulting and implementation contributed to a 4% increase in the Global S&BT segment.
Strategic Acquisition of LeewayHertz
Acquisition resulted in accretive revenue growth and expands Gen AI capabilities.
Improved Gross Margin
Total company adjusted gross margin improved to 47.7% compared to 43.3% in the prior year.
Increased Dividend
Board of Directors authorized a 9% increase in annual dividend from $0.44 to $0.48 per share.
Lowlights
Oracle Solutions Segment Decline
Oracle Solutions segment revenue decreased by 6% compared to the same period in the prior year due to the wind down of a large engagement.
Weakness in eProcurement and OneStream Offerings
Revenue growth from Gen AI consulting was offset by weakness in eProcurement and OneStream implementation offerings.
First Quarter 2025 Outlook
Expected total revenues for Q1 2025 to be down with combined Oracle and SAP segments expected to decline 8% to 10%.
GAAP Net Income Decline
GAAP net income for Q4 2024 was $3.6 million, compared to $7.9 million in the prior year.
Company Guidance
In The Hackett Group's fourth quarter earnings call for fiscal year 2024, they reported total revenues of $79.2 million and adjusted earnings per share of $0.47, both surpassing their quarterly guidance. The performance was primarily driven by the overperformance of their SAP segment and strong growth in the GSBT segment, which saw increased revenue from Gen AI engagements. Gen AI revenues, which have higher margins than traditional consulting, were bolstered by the capabilities of their AI XPLR platform and the recent acquisition of ZBrain. While the GSBT segment grew by 4%, it was partially offset by weaknesses in the eProcurement practice. The SAP Solutions segment showed a 51% increase in revenues year-over-year due to significant value-added reseller transactions, attributed to an expanded sales force. The call highlighted the strategic opportunity in Gen AI-enabled transformations, with The Hackett Group positioning itself as a leader in helping clients navigate this generational shift. The company also noted a strategic acquisition of LeewayHertz, which is expected to have a consequential impact on 2025 results, and reiterated a focus on expanding recurring high-margin IP-related services. The guidance for the first quarter of 2025 estimates revenues between $75 million and $76.5 million, with adjusted earnings per share between $0.39 and $0.41.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.