A year ago Hammond Power had been flat for years and was trading around 16.00 it is now around 80.00.
What has changed and is it sustainable?
Thank You
HPS.A has seen rapid demand for its products, driven by custom power units that serve renewable and data center applications. With the significant rise in installation of renewable energy systems, Hammond's dry type transformers have seen significant growth. Much of HPS.A's share price growth has come alongside fundamental growth. Its net profit margins have expanded from ~2% in 2015 to 9.3% currently, and its sales growth is in the 20%+ range, whereas several years ago it was in the mid-single to low double-digits. Its earnings have grown substantially as a combination of rising margins and high sales growth. We feel that its margins are sustainable, but its sales growth may see ebbs and flows, however, it continues to trade at a reasonable valuation of 15X forward earnings.