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Hammond Power Solutions
(TSX:HPS.A)
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Rating:71Outperform
Price Target:
C$308.00
▲(36.06% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by strong financial fundamentals (growth and a solid balance sheet) but is constrained by weak cash-flow conversion and recent margin pressure. Technicals are bullish but overextended, adding near-term pullback risk. Valuation is on the expensive side with a low dividend yield.
Positive Factors
Balance sheet strength
Moderate leverage (D/E ~0.22) and steady equity growth give the company durable financial flexibility. A high trailing ROE (~18.8%) signals efficient capital use, supporting reinvestment capacity and resilience to industry cycles over the medium term.
Negative Factors
Weak cash conversion
Operating cash flow materially lags earnings (~0.16x net income) and free cash flow is roughly breakeven and volatile. This persistent cash conversion weakness can constrain capex, working-capital flexibility, and shareholder returns without external financing over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength
Moderate leverage (D/E ~0.22) and steady equity growth give the company durable financial flexibility. A high trailing ROE (~18.8%) signals efficient capital use, supporting reinvestment capacity and resilience to industry cycles over the medium term.
Read all positive factors
Hammond Power Solutions (HPS.A) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$3.32B
Dividend Yield0.39%
Average Volume (3M)53.75K
Price to Earnings (P/E)51.3
Beta (1Y)1.30
Revenue Growth20.35%
EPS Growth-26.97%
CountryCA
Employees2,121
SectorIndustrials
Sector Strength72
IndustryElectrical Equipment & Parts
Share Statistics
EPS (TTM)5.50
Shares Outstanding9,126,624
10 Day Avg. Volume46,552
30 Day Avg. Volume53,747
Financial Highlights & Ratios
PEG Ratio26.32
Price to Book (P/B)5.39
Price to Sales (P/S)2.11
P/FCF Ratio-152.08
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$361.33Price Target Upside59.62% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)8.97
Revenue Forecast (FY)C$1.30B
Hammond Power Solutions Business Overview & Revenue Model
Company Description
Hammond Power Solutions Inc. (HPS) specializes in the engineering, manufacturing, and sale of a broad spectrum of electrical power products. Their portfolio includes tailored magnetic components, alongside a comprehensive range of standard dry-typ...
How the Company Makes Money
Hammond Power Solutions makes money mainly by designing, manufacturing, and selling transformers and related electrical power products to customers through a mix of direct sales and channel partners (e.g., electrical distributors and OEM relations...
Hammond Power Solutions Earnings Call Summary
Earnings Call Date:Oct 23, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Neutral
The earnings call showcased strong revenue growth and significant backlog increase, primarily driven by the U.S. and data center segments. However, profitability was challenged by material cost pressures, tariff impacts, and unabsorbed overheads in new facilities. While the company is optimistic about future quarters, current margin pressures and economic uncertainties in certain markets present notable challenges.Positive Updates
Record Revenue Growth
Revenue reached $218 million, marking the second best quarter for shipments ever and a 14% increase compared to Q3 2024, driven by U.S. shipments and gains in all market channels.
Negative Updates
Profitability Decline
Gross margin decreased to 30.1% from 33.8% in Q3 2024 due to ongoing material cost pressures and overhead expenses.
Read all updates
Q3-2025 Updates
Positive
Negative
Record Revenue Growth
Revenue reached $218 million, marking the second best quarter for shipments ever and a 14% increase compared to Q3 2024, driven by U.S. shipments and gains in all market channels.
Read all positive updates
Company Guidance
During the Hammond Power Solutions Third Quarter 2025 Financial Results Conference Call, the company provided guidance indicating a strong performance with revenue reaching $218 million, reflecting a 14% increase compared to Q3 2024. The U.S. market led this growth, particularly through the private label and distribution channels, contributing significantly to a 28% increase in the backlog since the beginning of the year. Despite the rise in sales, the gross margin was pressured, decreasing to 30.1% due to material cost pressures and overheads from new facilities in Mexico, which impacted margins by 233 basis points. Nonetheless, pricing adjustments made in September are expected to improve margins in the fourth quarter. The company also noted a significant backlog, with 53% attributed to data center orders, and anticipates expanding its manufacturing capacity to approximately $1.2 billion by 2027, primarily from its Monterrey IV facility. Net earnings for the quarter were reported at $17,440 million, with adjusted EBITDA at $30,290 million, while adjusted EPS stood at $1.56. Looking forward, Hammond Power Solutions expects its increased backlog to alleviate under-absorption challenges and anticipates positive impacts from recent pricing actions.Hammond Power Solutions Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
82
Very Positive
Cash Flow
48
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 961.69M | 898.25M | 788.34M | 710.06M | 558.46M | 380.20M |
| Gross Profit | 288.60M | 271.07M | 258.28M | 231.01M | 165.19M | 102.43M |
| EBITDA | 115.91M | 124.47M | 112.69M | 96.00M | 69.74M | 30.05M |
| Net Income | 65.58M | 72.24M | 71.53M | 63.40M | 44.83M | 15.18M |
Balance Sheet | ||||||
| Total Assets | 631.02M | 598.92M | 493.14M | 408.34M | 302.67M | 235.10M |
| Cash, Cash Equivalents and Short-Term Investments | 38.93M | 40.91M | 34.09M | 52.59M | 28.13M | 20.91M |
| Total Debt | 83.08M | 81.42M | 36.23M | 37.03M | 17.59M | 28.14M |
| Total Liabilities | 260.23M | 246.86M | 185.10M | 177.97M | 125.78M | 109.10M |
| Stockholders Equity | 370.79M | 352.06M | 308.04M | 230.38M | 176.89M | 126.00M |
Cash Flow | ||||||
| Free Cash Flow | 1.75M | -12.48M | 24.05M | 23.55M | 27.68M | 14.38M |
| Operating Cash Flow | 38.07M | 23.07M | 64.75M | 44.11M | 37.01M | 20.45M |
| Investing Cash Flow | -39.62M | -38.85M | -62.98M | -19.36M | -12.67M | -10.91M |
| Financing Cash Flow | 9.36M | 24.41M | -24.21M | 755.00K | -22.30M | -4.26M |
Hammond Power Solutions Technical Analysis
Neutral
226.37
Price Trends
317.50
Negative
267.31
Positive
218.69
Positive
Market Momentum
-6.66
Positive
38.32
Neutral
21.19
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 226.37 is below the 20-day moving average (MA) of 318.96, below the 50-day MA of 317.50, and above the 200-day MA of 218.69, indicating a neutral trend. The MACD of -6.66 indicates Positive momentum. The RSI at 38.32 is Neutral, neither overbought nor oversold. The STOCH value of 21.19 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | C$198.35M | 13.07 | 11.46% | 0.54% | 14.43% | -19.28% | |
71 Outperform | C$3.32B | 51.29 | 18.82% | 0.69% | 20.35% | -26.97% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | C$256.08M | -231.17 | -6.81% | ― | 21.49% | 60.08% | |
57 Neutral | C$657.95M | 81.21 | 11.31% | ― | 46.91% | ― | |
51 Neutral | C$25.68M | -10.63 | -1552.79% | ― | -20.31% | 34.02% | |
42 Neutral | C$3.98M | -0.88 | 26.22% | ― | -20.21% | 57.49% |
* Industrials Sector Average
TSE:HPS.A
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118.45%
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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.