Thanx for your "thanks" Joby ! I can only hope that folk get positive aspects out of my opinions on stocks. We often have our own personal strategies and outlooks, and that is probably what makes a Board such as this a constructive venue due to the diversity of contributions.
With regard to HSOA ....
Personally, I interrogate Turnover, EBITDA, Interest Expense, Pre-tax profit, and Bottom Line in the Income Statement, and Interest Bearing Debt, Shareholder’s Interest and Capital Employed in the Balance Sheet. I combine these into ratios and set percentage targets for a company to meet or exceed.
With this in mind, I had a look at HSOA, based on its Annual Results.
There’s been a very good increase in its annual Turnover, as well as its Operating Margin. The latter stands at a healthy percentage. EPS is also up.
Its long term debt has declined, but its latest debt expense on its Income Statement is very high, at a pre-tax 47% of its Bottom Line. With a decline in debt I suspect this will fall off. The one area that, for me, looks less promising is HSOA’s Pre-tax Return on Capital Employed. For me, a company needs to do better than 13%.
There’s not much that HSOA appears able to do about its Cost of Sales to T/O ratio. But its SG&A to T/O ratio has been falling, which is positive. Now if HSOA can continue to increase T/O and maintain these last two aspects, then more T/O Revenue should reach the Pre-Tax level which will increase its Return on C.E.
It will also increase EPS, and all things being equal, it should reduce its P/E.
This, IMO, should make HSOA more attractive "going forward", especially with its current TTM P/E standing at 12.4.
But that’s just my opinion ... |
