Hammond Power Solutions (HPS.A) AI Stock Analysis

• Market Cap: $2.35B
• Dividend Yield: 0.69%
• Average Volume (3M): 53.75K
• Price to Earnings (P/E): 26.3
• Beta (1Y): 1.71
• Revenue Growth: 11.19%
• EPS Growth: 19.13%
• Country: CA
• Employees: 2,121
• Sector: Industrials
• Sector Strength: 72
• Industry: Electrical Equipment & Parts
• EPS (TTM): 1.98
• Shares Outstanding: 9,126,624
• 10 Day Avg. Volume: 46,552
• 30 Day Avg. Volume: 53,747
• PEG Ratio: 26.33
• Price to Book (P/B): 5.39
• Price to Sales (P/S): 2.11
• P/FCF Ratio: -152.08
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 2.59
• Enterprise Value/Gross Profit: 8.54
• Enterprise Value/Ebitda: 18.96
• 1Y Price Target: $222.65
• Price Target Upside: 15.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 8.34
• Revenue Forecast (FY): $1.21B

• Rating: 71 Outperform
• Price Target: C$218.00 ▲(13.57% Upside)
• Action: Reiterated Date: 03/21/26
• Date: Action: Reiterated 03/21/26

The score is driven primarily by strong underlying growth/profitability and a solid balance sheet, partially offset by the 2025 deterioration in cash generation (negative free cash flow). Technicals remain trend-supportive but show weakening momentum, while valuation and dividend yield are only moderately supportive. Earnings call commentary is constructive on backlog and capacity expansion, but margin pressures remain a notable near-term risk.

Positive Factors

Multi-year revenue and profit improvement

Hammond Power has delivered sustained revenue expansion and materially improved profitability over the multi-year cycle, indicating durable demand for engineered transformers and power solutions. Consistent top-line growth and higher net income support reinvestment, R&D and capacity spending without relying on one-off gains.

Large, growing backlog with data center exposure

A meaningful backlog increase, driven heavily by data-center projects, provides revenue visibility and supports higher utilization as projects convert to shipments. Data-center demand is structural (capacity buildouts, electrification) and reduces near-term sales volatility while improving planning and margin recovery as pricing actions and absorption improve.

Planned manufacturing capacity expansion

Committed capacity expansion (Monterrey IV and related investments) scales production toward a much larger addressable opportunity. Higher installed capacity supports larger contract wins, improves lead times for engineered units, and, over time, should reduce per-unit overheads and strengthen competitive position in North American and Mexico markets.

Negative Factors

2025 cash-flow deterioration

A sharp reversal to negative free cash flow signals increased working-capital absorption or elevated capex tied to expansion, which can strain liquidity and limit optionality. If weak cash conversion persists it increases reliance on external funding, raises financing costs, and can delay returns from capacity investments.

Margin pressure from inputs, tariffs, and new-plant overheads

Sustained margin erosion from higher commodity costs, tariff changes and under-absorbed fixed costs at new plants undermines the company's profit stability. Even with pricing actions, persistent input volatility and product mix risk could compress long-term operating margins until scale and procurement improvements are realized.

Step-up in absolute debt in 2025

An increase in absolute debt weakens financial flexibility at a time of negative free cash flow and heavy capex. Higher leverage raises interest and refinancing risk and limits capacity to respond to market downturns or to pursue opportunistic M&A without additional funding, making capital allocation more constrained.

Hammond Power Solutions Business Overview & Revenue Model

Company Description

Hammond Power Solutions Inc., together with its subsidiaries, designs, manufactures, and sells custom electrical engineered magnetics, standard electrical dry-types, cast resins, liquid filled transformers, and wound magnetic products for electrical and electronic industries. The company offers autotransformers, buck-boost transformers, control transformers, distribution transformers, drive isolation transformers, encapsulated transformers, furnace transformers, multi-pulse transformers, pad mounted transformers, regulating transformers, and medium voltage distribution transformers, as well as reactors, active harmonic filters, dV/dT filters, and unitized substations. It serves the oil and gas, mining, steel, waste and water treatment, commercial construction, data centers and wind power generation industries in Canada, the United States, Mexico, and India. The company was founded in 1917 and is headquartered in Guelph, Canada.

How the Company Makes Money

Hammond Power Solutions makes money primarily by manufacturing and selling electrical power equipment—most notably dry-type transformers—at a price that reflects the engineered specifications, materials (e.g., copper/aluminum windings and core steel), testing/standards compliance, and delivery requirements. Revenue is generated mainly from product sales (standard catalog units and engineered-to-order/custom units) to electrical distributors and to end users through EPC contractors, OEMs, and direct commercial/industrial accounts; these channels typically support recurring demand tied to new construction, infrastructure upgrades, electrification projects, and replacement of aging equipment. The company’s earnings are driven by (i) volume of transformer shipments, (ii) average selling price and mix (higher-specification and custom units generally carry higher pricing), (iii) manufacturing utilization and productivity, and (iv) the spread between selling prices and input costs for key commodities and components. Additional revenue can come from related power distribution/power-quality products, accessories, and project-related services such as application engineering, customization, and after-sales support associated with delivered equipment; if specific breakout figures for these items are not available, null.

Hammond Power Solutions Financial Statement Overview

Summary

Strong multi-year revenue and earnings growth with generally healthy balance-sheet flexibility, but cash-flow quality is a key concern as 2025 operating cash flow fell sharply and free cash flow turned negative after several positive years.

Income Statement

Revenue expanded strongly over the cycle (2020–2025), with growth accelerating materially in 2022–2023 and remaining positive in 2024–2025. Profitability improved meaningfully versus 2020–2021, with gross and operating profitability holding at healthy levels in 2023–2024 and net income reaching ~$72M in 2024–2025. The main weakness is a clear deceleration in top-line growth in 2025 versus the prior two years, which raises the bar for maintaining margin and earnings momentum.

Balance Sheet

The company shows a strengthening capital base, with equity rising substantially from 2020 to 2025 alongside asset growth. Leverage appears manageable in the years provided, with low debt relative to equity in 2021–2024, supporting financial flexibility. A key watch item is the step-up in absolute debt in 2025 versus 2024, even though overall balance sheet scale and profitability (solid returns on equity across recent years) help offset that risk.

Cash Flow

Cash generation is the weakest area: operating cash flow was solid in 2022–2024 but fell sharply in 2025, and free cash flow turned negative in 2025 after being consistently positive from 2020–2024. This suggests higher investment needs and/or working-capital drag, which can pressure funding needs despite strong reported earnings. The prior multi-year track record of positive free cash flow is a support, but the 2025 reversal is a notable near-term concern.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	898.25M	788.34M	710.06M	558.46M	380.20M
Gross Profit	271.07M	258.28M	231.01M	165.19M	102.43M
EBITDA	124.47M	112.69M	96.00M	69.74M	30.05M
Net Income	72.24M	71.53M	63.40M	44.83M	15.18M
Balance Sheet
Total Assets	598.92M	493.14M	408.34M	302.67M	235.10M
Cash, Cash Equivalents and Short-Term Investments	40.91M	34.09M	52.59M	28.13M	20.91M
Total Debt	81.42M	36.23M	37.03M	17.59M	28.14M
Total Liabilities	246.86M	185.10M	177.97M	125.78M	109.10M
Stockholders Equity	352.06M	308.04M	230.38M	176.89M	126.00M
Cash Flow
Free Cash Flow	-12.48M	24.05M	23.55M	27.68M	14.38M
Operating Cash Flow	23.07M	64.75M	44.11M	37.01M	20.45M
Investing Cash Flow	-38.85M	-62.98M	-19.36M	-12.67M	-10.91M
Financing Cash Flow	24.41M	-24.21M	755.00K	-22.30M	-4.26M

Hammond Power Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 191.95
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HPS.A, the sentiment is Positive. The current price of 191.95 is above the 20-day moving average (MA) of 189.97, above the 50-day MA of 185.66, and above the 200-day MA of 151.90, indicating a bullish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 51.89 is Neutral, neither overbought nor oversold. The STOCH value of 50.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:HPS.A.

Hammond Power Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HMM.A	75 Outperform	C$116.29M	8.83	11.26%	0.54%	12.69%	-7.21%
HPS.A	71 Outperform	$2.35B	26.28	24.68%	0.69%	11.19%	19.13%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
ELVA	58 Neutral	$497.00M	79.82	14.29%	―	46.80%	―
GRID	54 Neutral	C$241.28M	-172.86	-13.77%	―	26.28%	27.86%
LPS	43 Neutral	C$11.64M	-7.82	-1552.79%	―	27.76%	-0.37%
EGT	40 Underperform	C$5.65M	-0.93	26.22%	―	―	―

Hammond Power Solutions Corporate Events

Hammond Power Solutions Posts Record 2025 Sales as Backlog and U.S. Demand Surge

Hammond Power Solutions reported record annual sales of $898.3 million for 2025, up 13.9% from 2024, driven largely by strong U.S. demand for private label and custom-engineered products tied to data centre expansion, infrastructure investment and industrial electrification. The company’s backlog at year-end jumped 122% year over year and 74% sequentially, providing strong revenue visibility into 2026, though gross margin compressed to 30.3% due to unabsorbed costs at a new factory, higher material costs and tariffs.

Quarterly adjusted EBITDA reached $38.7 million, contributing to a record annual adjusted EBITDA of $133.3 million and annual adjusted earnings per share of $6.81, while the net cash position and working capital improved. Hammond invested $35 million in capital spending, expanding capacity in Mexico and other key locations to reduce lead times and support large projects starting in early 2026, even as selling and distribution expenses rose with higher freight, commissions and growth-related investments, and general and administrative costs declined versus the prior year.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$223.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Hammond Power Solutions Sets March Date for Q4 and Year-End 2025 Results Call

Hammond Power Solutions Inc. will release its financial results for the fourth quarter and full year ended December 31, 2025, after markets close on March 19, 2026. The company will follow with a conference call and audio webcast on March 20, offering live access and a replay available for 12 months, underscoring its ongoing engagement with investors and transparency around financial performance.

The timing and structure of the announcement and webcast highlight HPS’s efforts to maintain regular communication with the market as it continues to grow its global footprint in electrification products. Stakeholders will look to these results and the accompanying commentary for insights into demand trends across its transformer and power quality portfolio, as well as the company’s positioning in key international markets.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$223.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Hammond Power Solutions Declares Eligible Quarterly Dividend

Hammond Power Solutions Inc. has declared a quarterly cash dividend of $0.275 per Class A Subordinate Voting Share and per Class B Common Share, payable on March 27, 2026 to shareholders of record as of March 19, 2026. The company has designated this distribution as an eligible dividend for Canadian income tax purposes, providing potentially favorable tax treatment for qualifying resident investors.

The announcement underscores Hammond Power Solutions’ ongoing return of capital to shareholders while emphasizing that future dividend decisions remain at the discretion of its board, reflecting standard caution around forward-looking information. The designation of the payout as an eligible dividend may enhance its appeal to Canadian investors, reinforcing the company’s engagement with its shareholder base.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$223.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Hammond Power Solutions to Acquire AEG Power Solutions in C$365 Million Deal

Hammond Power Solutions Inc. has signed a definitive all-cash agreement to acquire AEG Power Solutions for an enterprise value of C$365 million, in a deal that will add AEG’s C$326 million in 2025 revenue, 780 employees, and global industrial power electronics portfolio to HPS’s existing transformer and power quality business. The acquisition is designed to accelerate HPS’s growth by expanding its product offering into integrated electrical solutions, increasing exposure to high‑growth industrial, infrastructure, and energy transition markets, broadening its geographic reach, and enlarging its installed base and recurring aftermarket services, with management expecting the transaction to be accretive to adjusted earnings per share in the first full year and to support long‑term value creation and deleveraging once it closes, anticipated in the second quarter of 2026.

HPS will fund the acquisition through a new committed syndicated debt facility comprising a term loan and revolving credit line, while also repaying AEG Power Solutions’ outstanding bank debt at closing. Following completion, AEG Power Solutions will operate as a wholly owned subsidiary with its current leadership team continuing to manage day‑to‑day operations, positioning the combined company as a larger global player in power quality and industrial power electronics with enhanced scale, technology depth, and financial flexibility.

The most recent analyst rating on ($TSE:HPS.A) stock is a Hold with a C$200.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.