Q: 5I has been putting HPS.A at the front of the line in growth stocks and I have been getting interested. I like the idea of the business. I also subscribe to Simply Wall Street and get regular emails on stocks I'm watching. Below is my last email from them
" Second quarter 2024 results:
EPS: CA$1.98 (up from CA$1.12 in 2Q 2023).
Revenue: CA$197.2m (up 14% from 2Q 2023).
Net income: CA$23.6m (up 77% from 2Q 2023).
Profit margin: 12% (up from 7.7% in 2Q 2023).
The increase in margin was driven by higher revenue.Revenue exceeded analyst estimates by 3.6%. Earnings per share (EPS) also surpassed analyst estimates by 1.5%.Revenue is forecast to grow 7.3% p.a. on average during the next 3 years, compared to a 28% growth forecast for the Electrical industry in Canada.Over the last 3 years on average, earnings per share has increased by 50% per year but the company’s share price has increased by 125% per year, which means it is tracking significantly ahead of earnings growth. "
I appears to me that the revenue is lagging the electrical industry and earnings are being exceeded by share price by quite a bit . The thing that hit me the hardest was the revenue forecast { 7.3% per anum } versus the electrical industry { 28% } . That is almost 4 times HPS.A's outlook .....Add to that that earnings increased 50% and the share price increased 125% suggesting the stock is well ahead of itself ..... Could 5I comment on this ? It looks to me like the shares are priced for perfection and one bad quarter could result in a major correction ? ......Thanks for your great service ......
" Second quarter 2024 results:
EPS: CA$1.98 (up from CA$1.12 in 2Q 2023).
Revenue: CA$197.2m (up 14% from 2Q 2023).
Net income: CA$23.6m (up 77% from 2Q 2023).
Profit margin: 12% (up from 7.7% in 2Q 2023).
The increase in margin was driven by higher revenue.Revenue exceeded analyst estimates by 3.6%. Earnings per share (EPS) also surpassed analyst estimates by 1.5%.Revenue is forecast to grow 7.3% p.a. on average during the next 3 years, compared to a 28% growth forecast for the Electrical industry in Canada.Over the last 3 years on average, earnings per share has increased by 50% per year but the company’s share price has increased by 125% per year, which means it is tracking significantly ahead of earnings growth. "
I appears to me that the revenue is lagging the electrical industry and earnings are being exceeded by share price by quite a bit . The thing that hit me the hardest was the revenue forecast { 7.3% per anum } versus the electrical industry { 28% } . That is almost 4 times HPS.A's outlook .....Add to that that earnings increased 50% and the share price increased 125% suggesting the stock is well ahead of itself ..... Could 5I comment on this ? It looks to me like the shares are priced for perfection and one bad quarter could result in a major correction ? ......Thanks for your great service ......
5i Research Answer:
Because every single trade on the market has an equal and opposing view, we do not spend a lot...