https://americas.hammondpowersolutions.com/
This Canadian Power / Infrastructure company has had a great year, This company makes transformers and other power related products. Their chart shows a long steady climb upward, and then the market wide sell off in April because of Mid East war concerns, and then consolidation as they went into into earnings which was yesterday. Earnings were great, forward guidance was great, but the market reacted badly and the sitcom tanked 12% today.
Record sales of $190 million in the quarter, a 11.4% increase versus 2023. Adjusted EBITDA of $30,972 in the quarter, or 16% of sales. Adjusted EBITDA is 6% higher than the first quarter of 2023. Gross margin of 31.7% for the quarter. Net Earnings of $7.9 million in the quarter. Earnings per share of $0.67 for the quarter, significantly impacted by share-based compensation.
After much research as to what caused the sell off I reached out to analyst Betty Yang at ( https://www.canaccordgenuity.com/capital-markets/ ) and she said the following:
"A lot of the volatility with the stock has to deal with its lack of liquidity. Beyond that, we think some investors might be misunderstanding the math behind share-based compensation. SBC was $17M this quarter (resulted in an EPS miss), but this was solely due to the rapid rise in stock prices over the past couple of months.
To us, revenue is great. North America revenue beat our estimates. India was in line. The construction of the new facility in Mexico is progressing according to plan. On top of that, HPS announced a 4% price increase in April. These factors give us confidence in our estimates of an ~8% volume growth and a 3% price increase for the year.
We don’t believe the fundamentals of this business have changed this quarter. Rather, we see the weakness as a buying opportunity."
I will be adding to my position of 20 shares at $100 tomorrow, the stock closed at $83.50 today.
