Value Investors: Hammond Power Solutions Is A Good Buy


As multiple companies come out with successful vaccine trial results, benchmark indices are getting back to pre-pandemic highs. The TSX is less than 5% away from its February high of 17,944. While most investors look at bigger names to invest their funds, a lot of value stocks sit there, untouched.

Hammond Power Solutions (HMDPF) is one such stock. The company is a manufacturer of dry-type and cast resin transformers and related magnetics that are used in industries as varied as renewable energy to drive and automation to energy distribution (electricity) to infrastructure to irrigation. The company operates across North America, Asia, and the Middle East.

It provides control and automation products, including molded machine tool industrial control, industrial open core and coil control, general purpose enclosed, encapsulated control, and energy-efficient drive isolation transformers, as well as reactors, DV/DT filters, and motor starting autotransformers.

It also offers low voltage distribution, medium voltage distribution, and power transformers; transformers for specialty electrical applications; and transformers for original equipment manufacturers. Hammond Power serves the oil and gas, mining, steel, waste and water treatment, and wind power-generation industries

Improving Q3 Numbers

Hammond reported its results for the third quarter of 2020 ended September 26, 2020, and the numbers were better than expected. Even though sales fell 14.6% compared to the corresponding period in 2019, earnings per share were up 11% for the quarter and 19% year-to-date.

The company clocked $78.11 million in sales for the quarter compared to $91.5 million in 2019, a decrease of $13.38 million. Year-to-date 2020 sales were $241.92 million compared to $268.12 million in 2019, a decrease of $26.20 million or 9.8%. 

U.S. sales decreased by 16% to $45.6 million compared to $54.26 million in Q3 2019. Canada clocked $28.83 million in sales for Q3 2020 compared to Q3 2019’s $31.49 million. India’s sales for the quarter declined by a massive 36% to $3.67 million versus Q3 2019’s $5.74 million.

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