Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 24 Apr, 25 | HPS-A | Buy | CAD 85.31 | CAD 91.72 | CAD 96.89 | 1 day | 13.6% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Hammond Power Solutions Inc., together with its subsidiaries, engages in the design, manufacture, and sale of various transformers in Canada, the United States, Mexico, and India. It offers buck-boost, control, distribution, drive isolation, encapsulated, furnace, multi-pulse, pad mounted, and regulating transformers; and active harmonic filters, autotransformers, dV/dT filters, and reactors, as well as medium voltage distribution and unitized substations products. The company also offers DC power supplies. It serves renewable energy, commercial infrastructure, industrial, off-shore drilling, mining and construction, petro-chemical, power grid infrastructure, and EV charging industries. Hammond Power Solutions Inc. was founded in 1917 and is headquartered in Guelph, Canada.
Sales Expansion: Total revenue increased by CAD 78.3 million, or 11.0% year-over-year
Annual Net Earnings Growth: Net earnings rose from CAD 63.4 million in 2023 to CAD 71.5 million in 2024, a 12.8% increase
Adjusted EBITDA Decline in Q4: Adjusted EBITDA for Q4 2024 declined by CAD 4.5 million compared to Q4 2023
Sales Decline in India: Annual sales in India dropped by CAD 6.8 million, or 15.2%
Hammond Power Solutions faces investment risk from its rising capital expenditures and working capital requirements, which may pressure cash flows if anticipated growth or operational efficiencies are delayed
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 85.31 | 73.41 | 91.72 | 96.89 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Record Sales and Revenue Growth
Hammond Power Solutions (HPS) concluded 2024 with record-breaking quarterly sales of CAD 208.5 million, reflecting an 11.5% increase compared to Q4 2023. On a full-year basis, sales reached CAD 788.3 million, up 11.0% from CAD 710.1 million in 2023. The strongest growth was observed in the U.S. and Mexican markets, which contributed CAD 534.9 million in revenue, a 9.3% year-over-year increase. Canada also saw a notable 22.6% growth, while sales in India declined by 15.2%. The robust sales performance was supported by higher shipments of custom and configured products, particularly in Canada, the U.S., and India.
Strong Profitability and Margins
The company achieved net earnings of CAD 23.7 million in Q4 2024, translating to earnings per share (EPS) of CAD 1.99, up from CAD 1.68 in the same quarter last year. Full-year net earnings totaled CAD 71.5 million, with an EPS of CAD 6.01, marking a 12.8% increase over 2023. Gross margins remained healthy, increasing slightly to 32.8% for the full year, up from 32.5% in 2023. This improvement was attributed to better operating leverage and a shift toward higher-margin custom and configured products.
EBITDA Performance and Operating Leverage
Adjusted EBITDA for Q4 was CAD 32.5 million, or 15.6% of sales, while the year-end adjusted EBITDA was CAD 130.5 million, or 16.6% of sales. Though Q4 Adjusted EBITDA declined by CAD 4.5 million from the prior year, full-year Adjusted EBITDA increased by CAD 13.3 million or 11.3% over 2023, underscoring sustained operational strength. Total EBITDA for 2024 stood at CAD 112.9 million, an increase of 17.6% from the previous year, driven by volume growth and improved efficiency.
Geographic Performance and Market Dynamics
Regionally, the U.S. market saw strong performance in the distributor channel, particularly in custom and configured products. However, economic challenges led to a slowdown in standard product sales due to weaker industrial and commercial construction activity. Canada's growth was more balanced across distribution channels and supported by large-scale projects in commercial construction, public infrastructure, and utilities. Despite a quarterly increase, the Indian market showed a year-over-year decline, primarily due to timing and project-based variability.
5Strategic Investments and Cost Increases
HPS made significant capital investments totaling CAD 40.6 million in 2024, more than doubling the prior year’s spending. These funds were primarily directed toward capacity expansion and warehousing projects, which are expected to complete by the end of 2025 and support a future production capacity exceeding CAD 1.1 billion. However, these investments, along with acquisition-related costs and inventory build-outs, led to higher general and administrative expenses of CAD 76.1 million, a 11.9% increase over 2023.
Dividend and Shareholder Returns
The company rewarded shareholders with total cash dividends of CAD 0.975 per Class A and Class B share in 2024. A quarterly dividend of CAD 0.275 was declared and paid in December. Despite increased spending on growth initiatives, HPS maintained its ability to generate strong cash flows, with cash from operations rising to CAD 64.8 million from CAD 44.1 million in 2023, an increase of 46.8%.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Hammond Power Solutions Inc (TSX: HPS.A) at the closing market price of USD 85.31, as on April 23, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Electrical Equipment & Parts
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| HPS-A Hammond Power Solutions Inc |
-4.99 5.32% | 88.75 | 13.41 | 11.74 | 1.22 | 3.30 | 1.29 | 9.02 |
| EXRO Exro Technologies Inc |
-0.01 7.69% | 0.12 | - | - | 9.50 | 0.42 | 17.95 | -4.2731 |
| ELVA Electrovaya Inc. |
0.02 0.45% | 4.49 | 99.67 | 15.43 | 2.06 | 9.66 | 1.90 | 20.38 |
| GRID Tantalus Systems Holding Inc |
0.02 0.93% | 2.18 | - | 119.05 | 2.06 | 61.28 | 1.68 | 40.61 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 23,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Copyright © 2023 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.
