" 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 ......
Because every single trade on the market has an equal and opposing view, we do not spend a lot of time debating others' opinions. Every stock that has done well has been sold by someone else who hated it at the time. If we were to critique anything here, it would be the forecast. We are not sure how one predicts 28% industry growth. Historically it has been way lower, and only recently has seen bumps because of AI demand. The valuation comment is a bit easier: to us, it is simply the valuation uptick that occurs when a tiny company becomes bigger. This is quite common. Two years ago, HPS.A was too small to even be on small funds' radar screens, and now it can be bought, with market cap of $1.4B. It also gets noticed with four separate dividend increases in two years. We do not dispute that a 'bad' quarter would hurt the stock, but we would say this is true of nearly anything. If we look at consensus (three analysts) we show 28% growth in earnings expected in 2025. At 20X earnings today, with no debt and nicely-growing cash flow, we would not consider that excessively valued.