HMM-A.TO  Hammond Manufacturing Cl A

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

22.10M

Vuru Grade

48.78/100

Current Price

$1.95
+0.00 (+0.00%)

Growth Price

$2.93
Undervalued by 50.43%

Stability Price

$3.47
Undervalued by 78.17%

Company Metrics

  • P/E 12.19
  • P/S 0.19
  • P/B 0.51
  • EPS 0.16
  • Cash ROIC -3.98%
  • Cash Ratio 0.01
  • Dividend 0 / 0%
  • Avg. Vol. 2,020.00
  • Shares 11.33M
  • Market Cap. 22.10M

Company Description

Hammond Manufacturing Company Limited engages in the manufacture and sale of enclosures, outlet strips, and electronic transformers that are used by manufacturers of various electronic and electrical products worldwide. The company's electrical products include industrial enclosures, corrosion resistant enclosures, disconnect enclosures, modular freestanding enclosures, operator interface enclosur... more


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

News

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Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for HMM-A.TO 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 HMM-A.TO'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.

$1.95 Current Price

$2.93 Growth Price (DCF)

Undervalued by 50.43%


Growth Rate Assumed by Market: -337.65%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


HMM-A.TO's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$3.47 Stability Price (EPV)

Undervalued by 78.17%


Discount Rate: 15.0%

$1.10 NCA Price

Overvalued by 43.44%

$2.11 Book Price

Undervalued by 7.97%


Very Poor Cash Return on Invested Capital over the past 5 years

HMM-A.TO has failed to generate positive returns on 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.

HMM-A.TO has lost $3.98 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in December
20112012201320142015
Free Cash Flow -3.19M -682,000.00 2.26M 3.51M -10.45M
divided by
Invested Capital 31.73M 33.51M 35.20M 39.37M 45.08M
Cash ROIC -10.05% -2.04% 6.42% 8.92% -23.17%

Poor Return on Equity over the past 5 years

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

HMM-A.TO has only generated $7.20 of Earnings for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in December
20112012201320142015
Net Income 1.77M 1.66M 2.26M 3.64M 3.55M
divided by
Stockholders' Equity 29.47M 30.77M 33.44M 37.54M 43.53M
Return on Equity 6.01% 5.40% 6.75% 9.69% 8.16%

Mediocre Business Performance over the past 10 years

HMM-A.TO isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

HMM-A.TO has been unable to consistently create value for shareholders.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 1.12M 39,000.00 1.27M -1.12M 1.40M -3.19M -682,000.00 2.26M 3.51M -10.45M

Good Balance Sheet

HMM-A.TO's Total Assets double Total Liabilities. Its financial position is adequate. Remember to check Shareholders' Equity to see if it's stable or growing. It's one of the best measures of whether a company is creating value for shareholders.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 1.91M 2.50M 3.45M 869,000.00 422,000.00 633,000.00 416,000.00 774,000.00 326,000.00 263,000.00
Current Assets 29.64M 31.12M 34.80M 30.75M 33.14M 36.39M 38.36M 40.55M 43.61M 48.46M
Total Assets 50.11M 49.17M 48.50M 44.36M 47.19M 51.91M 54.72M 56.12M 59.25M 79.39M
Current Liabilities 22.56M 21.56M 17.16M 13.90M 15.94M 19.55M 20.80M 20.14M 19.55M 34.05M
Total Liabilities 28.50M 27.32M 21.76M 17.66M 18.69M 22.45M 23.95M 22.68M 21.70M 35.87M
Stockholder' Equity 21.60M 21.85M 26.74M 26.70M 28.50M 29.47M 30.77M 33.44M 37.54M 43.53M
Current Ratio 1.31 1.44 2.03 2.21 2.08 1.86 1.84 2.01 2.23 1.42
TL-to-TA 0.57 0.56 0.45 0.40 0.40 0.43 0.44 0.40 0.37 0.45

Consistent Reinvestment of Profits over the past 10 years

HMM-A.TO has consistently retained profits. This may put HMM-A.TO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, HMM-A.TO can greatly improve their long-term economic picture.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 11.08M 11.31M 16.20M 16.16M 17.96M 19.15M 20.59M 22.62M 25.80M 29.35M
Retained Earnings Growth - 2.11% 43.22% -0.27% 11.17% 6.60% 7.50% 9.87% 14.08% 13.76%

Highly Competitive Industry over the past 10 years

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

Only $2.35 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 1.17M 172,000.00 4.89M -44,000.00 2.03M 1.77M 1.66M 2.26M 3.64M 3.55M
divided by
Revenue 71.01M 73.05M 78.16M 69.41M 78.59M 85.49M 92.43M 92.31M 105.27M 117.16M
Net Profit Margin 1.65% 0.24% 6.26% -0.06% 2.59% 2.07% 1.80% 2.45% 3.45% 3.03%

Inconsistent Gross Profit Margins over the past 10 years

HMM-A.TO has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$36.00 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 20.64M 19.12M 23.10M 19.61M 22.21M 85.21M 25.34M 26.84M 32.41M 37.14M
divided by
Revenue 71.01M 73.05M 78.16M 69.41M 78.59M 85.49M 92.43M 92.31M 105.27M 117.16M
Gross Margin 29.06% 26.17% 29.55% 28.25% 28.26% 99.67% 27.41% 29.08% 30.79% 31.70%

High Capital Intensity over the past 10 years

HMM-A.TO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

218.37% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 1.47M 1.12M 1.59M 2.36M 2.16M 4.93M 2.90M 1.34M 2.02M 17.13M
divided by
Net Income 1.17M 172,000.00 4.89M -44,000.00 2.03M 1.77M 1.66M 2.26M 3.64M 3.55M
Capital Expenditure Ratio 125.30% 651.16% 32.54% -5,361.36% 106.10% 278.54% 174.61% 59.12% 55.49% 482.42%

Good Dividend History over the past 10 years

HMM-A.TO has distributed dividends for the past 6 years. Remember, the longer a company's dividend history, the more established the company might be and the more reliable the future of the dividend probably is.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - - - - 227,000.00 226,000.00 226,000.00 226,000.00 227,000.00 226,000.00
divided by
Shares Outstanding 11.74M 8.60M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M
Dividend Paid Per Share - - - - 0.02 0.02 0.02 0.02 0.02 0.02
Price at Year End - - - - - - 0.96 1.32 2.08 2.05
Dividend Yield - - - - - - 2.06% 1.50% 0.96% 0.97%

History of Stock Buybacks over the past 10 years

HMM-A.TO has some 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 CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 11.74M 8.60M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M 11.33M
Stock Bought Back - 36.51% -24.12% - - - - -0.00% - -
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