Harte-Hanks (HHS) AI Stock Analysis

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Harte-Hanks

(NASDAQ:HHS)

43Neutral

Harte-Hanks is facing significant financial challenges, with declining revenue and negative profitability. The technical analysis suggests a bearish trend in the market. The valuation is unattractive due to the negative P/E ratio and lack of dividend yield. Despite some positive developments highlighted in the earnings call, such as new client acquisitions and cost-saving initiatives, the overall outlook remains cautious due to ongoing financial and operational difficulties.

Harte-Hanks (HHS) vs. S&P 500 (SPY)

Market Cap

$34.34M

Dividend YieldN/A

Average Volume (3M)22.73K

Price to Earnings (P/E)―

Beta (1Y)0.44

Revenue Growth-3.26%

EPS Growth-1829.89%

CountryUS

Employees1,715

SectorIndustrials

Sector Strength68

IndustryAdvertising Agencies

Share Statistics

EPS (TTM)-4.17

Shares Outstanding7,369,367

10 Day Avg. Volume16,421

30 Day Avg. Volume22,733

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.19

Price to Cash Flow (P/CF)2.20

P/FCF Ratio2.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Harte-Hanks Business Overview & Revenue Model

Company DescriptionHarte-Hanks (HHS) is a global marketing services company that specializes in customer engagement and brand loyalty. The company operates in various sectors, including retail, automotive, financial services, and healthcare, providing a range of services such as data-driven marketing solutions, customer analytics, database management, and direct mail services. Harte-Hanks focuses on helping businesses improve customer relationships and optimize marketing strategies through targeted campaigns and personalized communication.

How the Company Makes MoneyHarte-Hanks makes money primarily through offering its marketing services to businesses across different industries. The company's revenue model is based on providing data-driven marketing solutions that help clients engage their customers effectively. Key revenue streams include fees for services such as customer database management, analytics, and targeted marketing campaigns. Additionally, Harte-Hanks generates income from its direct mail services, where it assists clients in designing, executing, and analyzing direct mail marketing strategies. Partnerships with technology providers and other firms often enhance the company's service offerings, contributing to its earnings by expanding its reach and capabilities. Harte-Hanks' focus on tailored marketing solutions allows it to charge premium rates for its expertise in enhancing customer engagement and brand loyalty.

Harte-Hanks Financial Statement Overview

Summary

Harte-Hanks is navigating through a period of financial difficulty characterized by declining revenue, negative profitability, and cash flow challenges. Despite some improvement in debt management, the company's financial health is burdened by significant losses and negative cash flow. These factors present risks to both short-term operations and long-term viability.

Income Statement

Neutral

Revenue has been declining over recent years, dropping from $217.6M in 2019 to $185.2M in 2024, indicating a negative growth trajectory. The gross profit margin improved significantly in 2024, reaching 49.4% due to a decrease in revenue and proportionally greater decrease in cost of goods sold. However, the net profit margin turned negative at -16.3% in 2024, reflecting substantial losses. EBIT and EBITDA margins have also declined, with EBITDA turning negative in 2024. Overall, the income statement reflects a challenging period with declining revenues and profitability.

Balance Sheet

Neutral

The debt-to-equity ratio improved to 1.13 in 2024 from higher levels in previous years, which indicates reduced leverage but still reflects considerable debt. The return on equity (ROE) is not meaningful due to negative equity in previous years, but it improved to -139.7% in 2024. The equity ratio is relatively low at 21.3% in 2024, suggesting limited equity financing. The balance sheet shows moderate improvement in equity but remains burdened by debt.

Cash Flow

Negative

Operating cash flow turned negative in 2024 at -$3.0M, demonstrating cash flow challenges. Free cash flow also became negative, highlighting the company's inability to generate sufficient cash from operations to cover capital expenditures. The free cash flow to net income ratio and operating cash flow to net income ratio are indicative of cash flow difficulties. The cash flow statement reflects struggles in generating positive cash flow, posing a risk to financial stability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
185.24M	191.49M	206.28M	194.60M	176.90M
	Gross Profit
91.47M	30.56M	140.58M	144.33M	127.61M
	EBIT
2.09M	3.36M	15.11M	13.52M	-1.20M
	EBITDA
12.05M	9.89M	22.48M	15.20M	-13.53M
	Net Income Common Stockholders
-30.30M	-1.57M	36.78M	14.97M	-1.69M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.93M	18.36M	10.36M	11.91M	29.41M
	Total Assets
101.78M	122.76M	119.98M	107.86M	119.50M
	Total Debt
24.60M	28.51M	22.32M	30.77M	55.06M
	Net Debt
14.66M	10.14M	11.96M	18.86M	25.65M
	Total Liabilities
80.09M	102.90M	101.18M	122.85M	162.90M
	Stockholders Equity
21.69M	19.86M	18.81M	-14.99M	-43.40M
Cash Flow		Free Cash Flow
-6.73M	7.67M	22.99M	-4.81M	-10.54M
	Operating Cash Flow
-2.99M	10.48M	28.79M	-1.76M	-7.84M
	Investing Cash Flow
-3.74M	-2.31M	-11.49M	-2.90M	-775.00K
	Financing Cash Flow
-419.00K	-3.22M	-15.82M	-13.41M	7.31M

Harte-Hanks Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.66

Price Trends

50DMA

4.95

Negative

100DMA

5.21

Negative

200DMA

6.40

Negative

Market Momentum

MACD

-0.10

Negative

RSI

46.79

Neutral

STOCH

42.54

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HHS, the sentiment is Negative. The current price of 4.66 is above the 20-day moving average (MA) of 4.64, below the 50-day MA of 4.95, and below the 200-day MA of 6.40, indicating a bearish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 46.79 is Neutral, neither overbought nor oversold. The STOCH value of 42.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HHS.

Harte-Hanks Risk Analysis

Harte-Hanks disclosed 27 risk factors in its most recent earnings report. Harte-Hanks reported the most risks in the “Ability to Sell” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Harte-Hanks Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OMC	76 Outperform	$14.86B	10.14	37.92%	3.66%	6.79%	7.79%
PUBGY	73 Outperform	$23.52B	13.30	16.11%	2.74%	8.35%	26.60%
IPG	70 Outperform	$9.16B	13.47	17.82%	5.28%	-1.81%	-35.74%
WPP	67 Neutral	$7.84B	11.30	16.04%	6.93%	2.07%	407.27%
Sector *	63 Neutral	$4.29B	11.05	5.73%	232.30%	4.75%	-5.69%
GCI	44 Neutral	$418.53M	―	-11.19%	―	-5.79%	-10.12%
HHS	43 Neutral	$34.34M	―	-145.85%	―	-3.26%	-1829.89%

* Industrials Sector Average

Performance Comparison

HHS

Harte-Hanks

4.60

-2.38

-34.10%

IPG

Interpublic Group of Companies

25.14

-3.91

-13.46%

OMC

Omnicom Group

76.83

-11.38

-12.90%

WPP

36.43

-8.50

-18.92%

GCI

Gannett

2.88

0.43

17.55%

PUBGY

Publicis Groupe SA

24.72

-1.53

-5.83%

Harte-Hanks Earnings Call Summary

Earnings Call Date: Mar 17, 2025 | % Change Since: -6.43% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed outlook for Harte Hanks. While there are positive developments in revenue growth, new client acquisitions, and cost-saving initiatives, these are offset by declines in certain segments, reduced operating income and EBITDA, and challenges with cash flow and pension costs. The company is focusing on long-term strategies and acknowledges short-term fluctuations.

Highlights

Revenue Growth

Harte Hanks reported a 1.1% year-over-year revenue increase in Q3 2024, marking an improvement from the negative 16.6% revenue decline in Q3 2023.

New Client Acquisitions

The company secured new clients across various segments, including a dynamic design marketplace, a top financial services client, a global luxury automotive industry client, and a global resale marketplace for luxury goods.

Customer Care and Sales Services Growth

Revenues in the Customer Care segment increased to $13.1 million from $11.8 million in the prior year. Sales Services revenue grew from $2.2 million to $4.2 million, driven by increased volume from a large client.

Project Elevate Cost Savings

Project Elevate resulted in $6 million of in-year EBITDA improvement, with cost savings from personnel optimization, streamlining contracts, and improved warehouse operations.

Lowlights

Decline in Marketing Services and Fulfillment & Logistics

Marketing Services revenues fell to $9.1 million from $10.6 million, and Fulfillment & Logistics revenues decreased to $21.3 million from $22.5 million, due to customer budget reductions and lower logistics volume.

Operating Income and EBITDA Decline

Operating income in Q3 2024 was $1.9 million compared to $2.9 million in Q3 2023. Adjusted EBITDA was $4.1 million, slightly down from $4.2 million in Q3 2023.

Cash Position and Pension Plan Costs

Cash and cash equivalents decreased to $5.9 million from $13.3 million a year ago, impacted by a $6.1 million contribution to terminate Pension Plan 1 and additional costs for final onboarding pension expenses.

Expected Revenue Decline in Q4

The company anticipates a low to mid-single digit revenue decline in Q4 2024 as part of natural fluctuations during the path to sustainable growth.

Company Guidance

During the Harte Hanks Third Quarter 2024 Earnings Call, management provided detailed guidance on the company's performance and strategic direction. Kirk Davis, CEO, reported a modest 1.1% year-over-year revenue increase, contrasting the negative 16.6% decline from Q3 2023 when adjusted for acquired revenue. He acknowledged the expectation of a low to mid-single digit revenue decline in Q4, citing natural fluctuations in their growth trajectory. The focus remains on optimizing free cash flow, with significant investments in the newly established Customer Excellence and Growth division. David Garrison, CFO, highlighted the $47.6 million in revenues for Q3 2024, driven by growth in Customer Care and Sales Services, despite declines in other segments. The company aims for a $6 million EBITDA improvement, facilitated by Project Elevate's cost-saving measures, including personnel optimization and streamlined operations. Financially, the company ended the quarter with $5.9 million in cash and no debt, after a strategic $6.1 million contribution to terminate Pension Plan 1.

Harte-Hanks Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Harte Hanks Leadership Transition and Strategic Focus Shift

Neutral

Jan 28, 2025

Harte Hanks announced a leadership transition with CEO Kirk Davis stepping down for personal reasons as of February 14, 2025, and David Fisher appointed as the Interim Chief Operating Officer. This shift aligns with Harte Hanks’ strategic focus on advancing data-driven customer experiences, particularly leveraging AI for enhanced customer engagement. The company is actively seeking a new CEO to further drive innovation and shareholder value.

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.