HHS  Harte-hanks Inc.

Exchange

NYSE

Sector

Technology

Industry

Advertising

Market Cap.

96.10M

Vuru Grade

53.61/100

Current Price

$1.56
-0.01 (-0.64%)

Growth Price

$3.26
Undervalued by 109.05%

Stability Price

$4.68
Undervalued by 200.18%

Company Metrics

  • P/E 16.22
  • P/S 0.21
  • P/B 0.79
  • EPS -0.17
  • Cash ROIC 7.48%
  • Cash Ratio 0.18
  • Dividend 0 / 0%
  • Avg. Vol. 213,747.00
  • Shares 61.60M
  • Market Cap. 96.10M

Company Description

Harte-Hanks, Inc. operates as a direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to local, regional, national, and international customer and business-to-business marketers. The company operates through two segments, Direct Marketing and Shoppers. The Direct Marketing segment offers integrated, multichannel, and data-driven solutio... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Left For Dead At Under $1, Harte Hanks Still Doesn't Look Attractive
Seeking Alpha - Jun 3, 2016
Harte Hanks is still swooning, and it's not clear whether management has a) the competence or b) the sense of urgency to fix this organization.
News Harte-Hanks Inc.HHS
Wall Street Journal - Feb 11, 2011
News Harte-Hanks Inc.HHS. Significant News Only. 12/23/16; Press Release. Harte Hanks Completes Sale of Trillium Business.
Harte Hanks: Still Out Of Favor And Clearly Undervalued
Seeking Alpha - Nov 11, 2016
Harte Hanks, Inc. (NYSE:HHS) currently trades for ~$85m. In the next 6-12 months it will dispose of its crown jewel division for what I estimate to be very conservatively $100m (more than its current market cap) and use the cash from the sale to repay ...
Harte Hanks' (HHS) CEO Karen Puckett on Q1 2016 Results - Earnings Call Transcript
Seeking Alpha - Apr 29, 2016
Good day, everyone, and welcome to the Harte Hanks First Quarter 2016 Earnings Conference Call. Today's conference is being recorded.
Harte Hanks' (HHS) CEO Karen Puckett on Q3 2016 Results - Earnings Call Transcript
Seeking Alpha - Nov 5, 2016
Specifically, we had a strong September sell, saw stabilization in our database business, and are having success cross-selling with 3Q Digital and our Harte Hanks Consulting services. We're also seeing an increase in complex bids, which we can leverage ...
Harte Hanks' (HHS) CEO Karen Puckett on Q2 2016 Results - Earnings Call Transcript
Seeking Alpha - Aug 9, 2016
Please refer to today's earnings release for the required reconciliations and other related disclosures. Our earnings release is available on the Investors section of our website at hartehanks.
Clearlake-Backed Syncsort Buys Data Integration Software Developer Trillium ...
Mergers & Acquisitions - The Middle Market - Nov 30, 2016
Syncsort Inc., backed by Clearlake Capital, has agreed to purchase data integration software developer Trillium Software from Harte Hanks Inc. (NYSE: HHS). The $112 million cash deal is a result of the seller's initiative to focus on its core marketing ...
Harte Hanks Announces Sale of Trillium Business - Marketwired (press release)
Clearlake Capital-Backed Syncsort Acquires Trillium Software - PR Newswire (press release)
Harte Hanks sets $110M credit facility, discontinues dividend
Seeking Alpha - Mar 11, 2016
Harte Hanks (HHS +2%) has set up a new credit facility and says it will discontinue paying dividends. The company says the actions will enhance its flexibility.
Harte-Hanks (HHS) Enters New Credit Agreement, Discontinues Dividend - StreetInsider.com
Harte Hanks Seeks Strategic Alternatives for Trillium Software
Yahoo Finance UK - Jun 7, 2016
SAN ANTONIO, TX--(Marketwired - Jun 7, 2016) - Harte Hanks ( NYSE : HHS ), a leader in customer relationships, experiences and interaction-led marketing, today announced the Board of Directors has approved the exploration of strategic alternatives for ...
Harte Hanks Inc. (NYSE: HHS) pursuing strategic fit for Trillium - Scibility Media
Harte Hanks -19.5% after suspending dividend; BMO downgrades
Seeking Alpha - Mar 14, 2016
Harte Hanks (NYSE:HHS) has tumbled -19.5% today following its late Friday news that it was discontinuing its dividend after tomorrow's payment.
Harte Hanks Inc (HHS): BMO Capital Downgrades on Dividend Suspension - Bidness ETC
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for HHS to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate HHS's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$1.56 Current Price

$3.26 Growth Price (DCF)

Undervalued by 109.05%


Growth Rate Assumed by Market: -500.00%


Future Free Cash Flow Growth Rate: -19.7%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$4.68 Stability Price (EPV)

Undervalued by 200.18%


Discount Rate: 15.0%

$3.62 Book Price

Undervalued by 131.88%


Poor Cash Return on Invested Capital over the past 5 years

HHS has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

HHS has only created $7.48 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 39.63M 62.47M 43.70M 14.30M 19.37M
divided by
Invested Capital 640.67M 516.37M 455.95M 466.18M 299.57M
Cash ROIC 6.19% 12.10% 9.58% 3.07% 6.47%

Very Poor Return on Equity over the past 5 years

HHS has shown an inability to deliver results for shareholders. This could be due to poor management, HHS operating in a highly competitive industry, or having a weak business in general.

HHS has generated a $23.97 loss for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 44.20M -73.10M 24.44M 23.99M -170.93M
divided by
Stockholders' Equity 446.36M 328.16M 349.05M 326.68M 140.32M
Return on Equity 9.90% -22.28% 7.00% 7.34% -121.82%

Excellent Business Performance over the past 10 years

HHS has been able to maintain profitability in good times and bad. This could mean HHS has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

HHS has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 112.66M 115.00M 96.75M 105.01M 77.93M 39.63M 62.47M 43.70M 14.30M 19.37M

Weak Balance Sheet

HHS's financial position is not ideal. The key is to check whether HHS is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 38.27M 22.85M 30.16M 86.60M 86.00M 86.78M 49.65M 88.75M 56.75M 17.61M
Current Assets 279.98M 265.68M 241.20M 256.60M 268.46M 275.52M 225.50M 239.31M 206.49M 151.71M
Total Assets 969.29M 951.93M 913.57M 908.15M 926.88M 932.51M 706.21M 685.54M 647.20M 414.62M
Current Liabilities 171.24M 180.11M 187.74M 173.20M 280.96M 205.07M 140.20M 140.84M 124.27M 97.44M
Total Liabilities 475.81M 543.41M 557.19M 506.51M 489.06M 486.16M 378.05M 336.48M 320.52M 274.31M
Stockholder' Equity 493.48M 408.51M 356.37M 401.64M 437.82M 446.36M 328.16M 349.05M 326.68M 140.32M
Current Ratio 1.64 1.48 1.28 1.48 0.96 1.34 1.61 1.70 1.66 1.56
TL-to-TA 0.49 0.57 0.61 0.56 0.53 0.52 0.54 0.49 0.50 0.66

Low or No Reinvestment of Profits over the past 10 years

HHS has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to HHS operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 1.07B 1.15B 1.19B 1.22B 1.25B 1.28B 1.17B 1.16B 1.17B 973.54M
Retained Earnings Growth - 6.74% 3.81% 2.40% 2.83% 1.90% -8.64% -0.24% 0.22% -16.49%

Highly Competitive Industry over the past 10 years

It's likely that HHS is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely HHS invests heavily in R&D and Sales, General & Administrative expenses.

Only $0.48 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 111.79M 92.64M 62.74M 47.72M 53.60M 44.20M -73.10M 24.44M 23.99M -170.93M
divided by
Revenue 1.18B 1.16B 1.08B 860.14M 860.53M 850.77M 767.71M 559.61M 553.68M 495.30M
Net Profit Margin 9.44% 7.97% 5.79% 5.55% 6.23% 5.20% -9.52% 4.37% 4.33% -34.51%

Strong Pricing Power over the past 10 years

HHS has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$57.74 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 310.60M 291.42M 684.12M 547.91M 537.31M 524.41M 484.97M 398.01M 386.72M 351.98M
divided by
Revenue 1.18B 1.16B 1.08B 860.14M 860.53M 850.77M 767.71M 559.61M 553.68M 495.30M
Gross Margin 26.22% 25.06% 63.18% 63.70% 62.44% 61.64% 63.17% 71.12% 69.85% 71.06%

Medium Capital Intensity over the past 10 years

HHS has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

37.92% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 33.71M 28.22M 19.95M 9.01M 17.45M 21.03M 13.86M 15.87M 11.27M 11.57M
divided by
Net Income 111.79M 92.64M 62.74M 47.72M 53.60M 44.20M -73.10M 24.44M 23.99M -170.93M
Capital Expenditure Ratio 30.15% 30.46% 31.79% 18.89% 32.55% 47.59% -18.95% 64.94% 46.96% -6.77%

Very Strong Dividend History over the past 10 years

HHS has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests HHS is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid 18.90M 20.30M 19.10M 19.12M 19.14M 20.37M 26.96M 16.12M 21.49M 21.24M
divided by
Shares Outstanding 80.65M 73.70M 64.10M 63.89M 64.14M 63.55M 62.89M 62.81M 62.66M 61.64M
Dividend Paid Per Share 0.23 0.28 0.30 0.30 0.30 0.32 0.43 0.26 0.34 0.34
Price at Year End 24.13 15.02 5.30 10.27 12.27 9.09 5.80 7.77 7.71 3.33
Dividend Yield 0.97% 1.83% 5.62% 2.91% 2.43% 3.53% 7.39% 3.30% 4.45% 10.35%

Strong History of Stock Buybacks over the past 10 years

HHS has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 80.65M 73.70M 64.10M 63.89M 64.14M 63.55M 62.89M 62.81M 62.66M 61.64M
Stock Bought Back - 9.42% 14.97% 0.34% -0.40% 0.92% 1.06% 0.12% 0.25% 1.65%
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