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Hammond Power Solutions (OTC) (TSE:HPS.A)
:HPS.A
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Hammond Power Solutions (HPS.A) AI Stock Analysis

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TSE:HPS.A

Hammond Power Solutions

(OTC:HPS.A)

Rating:75Outperform
Price Target:
C$130.00
▲(12.49%Upside)
Hammond Power Solutions shows robust financial performance and strategic expansions, providing a strong foundation for future growth. However, challenges such as declining cash flow growth and margin pressures present risks that need addressing. The stock's technical and valuation metrics suggest moderate attractiveness, with corporate events adding a positive sentiment boost.

Hammond Power Solutions (HPS.A) vs. iShares MSCI Canada ETF (EWC)

Hammond Power Solutions Business Overview & Revenue Model

Company DescriptionHammond Power Solutions (HPS.A) is a leading manufacturer of dry-type transformers and related magnetics. The company operates in various sectors including industrial, commercial, and institutional, providing essential electrical solutions that are foundational in power distribution systems. Its core products include transformers, reactors, and power quality products, catering to a global clientele.
How the Company Makes MoneyHammond Power Solutions generates revenue primarily through the sale of its electrical products, particularly dry-type transformers, which are essential in power distribution and electrical systems. The company caters to a diverse range of industries including industrial, commercial, and institutional sectors, ensuring a broad customer base. Significant revenue streams include the sale of transformers and related products, custom-designed solutions for specific client needs, and servicing and support for its products. HPS also benefits from strategic partnerships and its ability to innovate in energy-efficient solutions, which enhances its market position and contributes to its earnings.

Hammond Power Solutions Earnings Call Summary

Earnings Call Date:Jul 24, 2025
(Q1-2025)
|
% Change Since: -17.25%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were positive developments such as sales growth, completion of the new factory, and sustainability advancements, challenges like declining gross margins, decreased EBITDA, and cash flow issues were significant. The strategic benefits from the Micron acquisition and factory expansion offer long-term growth potential, but current financial pressures and operational delays are concerning.
Q1-2025 Updates
Positive Updates
Quarterly Sales Growth
First quarter sales grew by 5.6% over the same quarter last year, with a backlog increase of more than 17%, confirming demand for custom products.
Expansion and Capacity Milestones
The new factory in Monterrey, Mexico reached a significant milestone of completion ahead of schedule, with product shipments expected to start by the end of the year.
Sustainability Improvements
Improved energy efficiency by 3.2% and diverted over 70% of waste from landfills through recycling, repurposing, and reuse.
Micron Acquisition Benefits
Micron contributed 3% to overall sales year-over-year, with promising initial synergies enhancing service to U.S. customers.
Negative Updates
Gross Margin Decline
Gross margins declined slightly to 31.5% from 31.7% in 2024 due to higher material and labor costs and a shift in product mix.
Adjusted EBITDA Decrease
Adjusted EBITDA was $30,916,000, a decline from both the first quarter of 2024 and the fourth quarter of 2024, due to lower gross margins.
Net Cash Decrease
Net cash decreased by $16 million in the first quarter of 2025, impacted by increased working capital requirements and annual incentive payments.
Standard Product Shipment Delays
Standard product shipments were delayed due to timing and trade uncertainties, impacting revenue realization in Q1.
Company Guidance
During the first quarter of fiscal year 2025, Hammond Power Solutions reported a sales increase of 6% compared to Q1 2024, reaching $201 million, with notable growth in Canada at 7%, though U.S. sales slightly declined. The quarter saw a 5.6% sales growth over the same period last year, driven by a 17% increase in backlog, particularly in custom products. Despite trade uncertainties and shifts in product mix, standard product shipments exceeded expectations. Gross margins slightly declined to 31.5%, influenced by increased material and labor costs, prompting a catalog product price increase effective in April. The adjusted EBITDA was $30.9 million, or 15.4% of sales, down from 16.2% in Q1 2024, primarily due to lower gross margins. The company also reported a decrease in net cash by $16 million and capital expenditures of $8 million for the quarter, aligning with a projected annual target of $40 million. The new factory in Monterrey, Mexico, is on track to start product shipping by year-end, enhancing capacity for custom products. Sustainability efforts showed a 3.2% improvement in energy efficiency and over 70% waste diversion from landfills.

Hammond Power Solutions Financial Statement Overview

Summary
Hammond Power Solutions exhibits strong financial health, with significant revenue growth and profitability as indicated by the high gross and net profit margins. The balance sheet is robust, characterized by low leverage and a strong equity position. However, the decline in free cash flow growth highlights potential liquidity constraints that require careful capital management.
Income Statement
88
Very Positive
The income statement shows strong performance with a consistent upward trend in revenue and net income over the years. Gross Profit Margin stands at 32.7% for TTM, reflecting robust profitability, while Net Profit Margin is 11.2%, indicating efficient cost management. Revenue growth has been significant, with a TTM increase of 13.8% from the previous year, showcasing strong demand and market position. EBIT and EBITDA margins are also healthy at 15.8% and 17.3% respectively, underscoring operational efficiency.
Balance Sheet
82
Very Positive
The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 0.15, indicating low financial leverage and a conservative capital structure. Return on Equity is impressive at 27.3% for TTM, highlighting effective use of equity to generate profits. The Equity Ratio is 64.4%, suggesting a strong equity base relative to total assets, which provides stability. However, slight increases in total liabilities warrant monitoring to ensure continued financial health.
Cash Flow
75
Positive
Cash flow analysis reveals a Free Cash Flow Growth Rate of -40.5% from the previous year, indicating a decline that could be due to increased capital expenditures. The Operating Cash Flow to Net Income Ratio is 0.62 for TTM, suggesting reasonable cash generation relative to accounting profit. The Free Cash Flow to Net Income Ratio is 0.16, which is relatively low and signals potential constraints in liquidity, despite positive operational cash flows.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue799.06M788.34M710.06M558.46M380.20M322.10M
Gross Profit261.29M258.28M231.01M165.19M102.43M86.99M
EBITDA138.38M112.69M96.00M69.74M30.05M29.33M
Net Income89.80M71.53M63.40M44.83M15.18M14.06M
Balance Sheet
Total Assets510.41M493.14M408.34M302.67M235.10M189.39M
Cash, Cash Equivalents and Short-Term Investments32.84M34.09M52.59M28.13M20.91M14.79M
Total Debt49.96M36.23M37.03M17.59M28.76M25.39M
Total Liabilities181.58M185.10M177.97M125.78M109.10M75.48M
Stockholders Equity328.82M308.04M230.38M176.89M126.00M113.92M
Cash Flow
Free Cash Flow14.32M24.05M23.55M27.68M14.38M14.75M
Operating Cash Flow55.46M64.75M44.11M37.01M20.45M19.68M
Investing Cash Flow-63.66M-62.98M-19.36M-12.67M-10.91M-4.75M
Financing Cash Flow-15.51M-24.21M755.00K-22.30M-4.26M-24.18M

Hammond Power Solutions Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price115.57
Price Trends
50DMA
114.71
Positive
100DMA
99.48
Positive
200DMA
109.61
Positive
Market Momentum
MACD
4.16
Positive
RSI
43.10
Neutral
STOCH
64.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HPS.A, the sentiment is Neutral. The current price of 115.57 is below the 20-day moving average (MA) of 126.13, above the 50-day MA of 114.71, and above the 200-day MA of 109.61, indicating a neutral trend. The MACD of 4.16 indicates Positive momentum. The RSI at 43.10 is Neutral, neither overbought nor oversold. The STOCH value of 64.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:HPS.A.

Hammond Power Solutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
C$109.94M5.9016.38%0.62%7.70%-2.20%
75
Outperform
C$1.38B17.2926.34%0.95%9.53%20.80%
73
Outperform
$247.06M-0.21%2.20%89.34%
61
Neutral
C$6.56B7.722.76%2.57%6.48%-23.55%
61
Neutral
C$161.58M-45.20%17.51%-2.94%
48
Neutral
$40.06M-3009.52%310.92%-69.91%
47
Neutral
C$15.60M-200.00%177.07%29.71%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:HPS.A
Hammond Power Solutions
115.57
7.96
7.40%
TSE:ELVA
Electrovaya
6.16
2.69
77.52%
TSE:EXRO
Exro Technologies
0.07
-0.48
-87.27%
TSE:LPS
Legend Power Systems
0.11
-0.11
-50.00%
TSE:HMM.A
Hammond Mfg Cl A SV
9.70
-0.68
-6.55%
TSE:GRID
Tantalus Systems Holding
3.16
1.68
113.51%

Hammond Power Solutions Corporate Events

Business Operations and StrategyFinancial Disclosures
Hammond Power Solutions Achieves Record Sales in Q2 2025 Amid Cost Challenges
Neutral
Jul 24, 2025

Hammond Power Solutions reported record sales of $224 million in Q2 2025, a 13.8% increase from the previous year, despite facing cost headwinds. The company’s gross margin decreased due to rising input costs and investments in new facilities, such as the new production site in Mexico. The U.S. market showed significant growth, particularly in private label channels, while the Canadian market expanded through distribution channels in sectors like EV charging and data centers. Despite a decrease in backlog from Q1 2025, it remains higher than the end of 2024. The company’s financial performance reflects strategic expansions and market adaptations, although challenges in supply chain and inflation impacted margins.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$169.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Financial Disclosures
Hammond Power Solutions to Announce Q2 2025 Financial Results
Neutral
Jul 10, 2025

Hammond Power Solutions Inc. announced it will release its second-quarter financial results for 2025 on July 24, with a conference call and webcast scheduled for July 25. This announcement is significant as it provides stakeholders with insights into the company’s financial performance and strategic positioning in the electrification industry.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$140.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Dividends
Hammond Power Solutions Declares Quarterly Dividend
Positive
Jun 9, 2025

Hammond Power Solutions Inc. announced a quarterly cash dividend of $0.275 per Class A and Class B share, payable on June 27, 2025, to shareholders of record as of June 20, 2025. This dividend is designated as an ‘eligible dividend’ under Canadian tax law, which may have implications for Canadian resident shareholders. The announcement reflects HPS’s ongoing commitment to providing shareholder returns and may influence investor perceptions and market positioning.

The most recent analyst rating on ($TSE:HPS.A) stock is a Buy with a C$169.00 price target. To see the full list of analyst forecasts on Hammond Power Solutions stock, see the TSE:HPS.A Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Hammond Power Solutions Reports Strong Shareholder Support at Annual Meeting
Positive
May 8, 2025

Hammond Power Solutions Inc. announced the results of its Annual General Meeting, where shareholders approved all proposed business items. This included the reappointment of KPMG LLP as auditors and the election of all director nominees, reinforcing the company’s governance and operational stability. The voting outcomes reflect strong shareholder support, which could positively impact the company’s strategic direction and stakeholder confidence.

Business Operations and StrategyFinancial Disclosures
Hammond Power Solutions Sees Sales Growth and Increased Backlog in Q1 2025
Positive
May 1, 2025

Hammond Power Solutions reported a 5.6% increase in sales for the first quarter of 2025, reaching $201 million, despite facing trade-tariff uncertainties. The company’s backlog grew by 17.7% from the previous quarter, driven by strong demand in certain markets, particularly data centers. Although there was a slight decline in gross margin due to increased material and labor costs, the company anticipates a favorable shift towards more custom product shipments with the early completion of a new factory. The company also announced a price increase to offset higher costs, which began to take effect in April 2025.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 26, 2025