At the current price of $45, what are market expectations regarding Helios Technologies’ future operating performance? Helios Technologies’ common shares will need to reach $75 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $88 Helios Technologies stock price by 2028.
Executive Summary
- Helios Technologies’ important characteristics: high expected growth, high financial strength, stability, and low profitability. Growth is a big positive influence on Helios Technologies’ valuation while Profitability is a big negative influence.
- Low valuation, lagging shareholder returns. Current valuation levels are below average relative to the Helios Technologies Peer Group. Recent market returns have substantially underperformed the Helios Technologies Peer Group. Total shareholder returns expected to seriously beat the overall equity market. Based on current investor expectations, Helios Technologies shares should reach a level of $88 by 2028 — an 12.9% per year total shareholder return. A 2028 stock price of $75 would reflect median performance and a price of $88 would be required to reach upper quartile performance.
- Growth has been Helios Technologies’ biggest valuation strength. Historical growth has been very high relative to the Helios Technologies Peer Group and forecasted growth is relatively very high. Asset Growth, Revenue Growth, Equity Growth, and EPS Growth have all been superior. These factors have buoyed market perceptions of Helios Technologies. Helios Technologies’ historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Helios Technologies’ consensus growth expectations are in line with past growth.
- Pretax ROA, and Pretax Margin are group lagging. These factors have negatively affected market perceptions of Helios Technologies. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
- Helios Technologies’ risk profile is favorable. Overall variability has been above average with above average revenue variability, above average E.P.S. variability, and relatively low stock price volatility. Financial Strength is relatively very high and earnings’ expectations are only average. The debt/capital ratio has been relatively steady.
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