Hackett Group, Inc. (NASDAQ: HCKT)

Sector: Technology Industry: Information Technology Services CIK: 0001057379
Market Cap 554.71 Mn
P/B 5.46
P/E 50.82
P/S 1.79
ROIC (Qtr) 7.67
Div Yield % 2.98
Rev 1y % (Qtr) -8.36
Total Debt (Qtr) 46.48 Mn
Debt/Equity (Qtr) 0.46

About

The Hackett Group, Inc., often recognized by its stock symbol HCKT, operates in the executive advisory, strategic consulting, and digital transformation industry. The company specializes in providing expertise in various areas including Generative Artificial Intelligence (Gen AI) strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology. It is renowned for its Oracle, SAP, OneStream, and Coupa implementation offerings. The Hackett Group's primary business activities revolve around its Global...

Read more

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 41.88M provides robust 0.90x coverage of total debt 46.48M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 13.89M provide 11.75x coverage of short-term debt 1.18M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 41.88M provides exceptional 33.56x coverage of interest expenses 1.25M, showing strong debt service capability.
  • Tangible assets of 106.52M provide exceptional 8.95x coverage of deferred revenue 11.90M, showing strong service capability backing.
  • Operating cash flow of 41.88M provides strong 3.52x coverage of deferred revenue 11.90M, indicating service delivery capability.

Bear case

  • Operating cash flow of 41.88M barely covers its investment activities of (7.64M), with a coverage ratio of -5.48, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 41.88M provides thin coverage of dividend payments of (12.69M) with a -3.30 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 13.89M provide limited coverage of acquisition spending of (767000), which is -18.12x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 41.88M shows concerning coverage of stock compensation expenses of 35.53M, with a 1.18 ratio indicating potential earnings quality issues.
  • Retained earnings of 75.77M provide limited buffer against comprehensive income items of (12.94M), which is -5.86x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.84 1.44
EV to Cash from Ops. EV/CFO 13.62 5.63
EV to Debt EV to Debt 12.27 8.06
EV to EBIT EV/EBIT 25.68 -4.05
EV to EBITDA EV/EBITDA 21.05 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 16.29 -1.66
EV to Market Cap EV to Market Cap 1.03 1.35
EV to Revenue EV/Rev 1.84 57.14
Price to Book Value [P/B] P/B 5.46 3.34
Price to Earnings [P/E] P/E 50.82 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.86 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 120.50 0.66
Dividend per Basic Share Div per Share (Qtr) 0.47 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 36.63 6.24
Interest Coverage Int. cover (Qtr) 17.79 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -73.71 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 39.45 114.15
Dividend Growth (1y) % Div 1y % (Qtr) 6.82 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -67.31 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -47.93 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) -54.05 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) -54.76 97.07
EPS Growth (1y) % EPS 1y % (Qtr) -68.55 147.29
FCF Growth (1y) % FCF 1y % (Qtr) -28.15 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.68 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.54 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.26 0.01
Cash Ratio Cash Ratio (Qtr) 0.33 0.66
Current Ratio Curr Ratio (Qtr) 1.88 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.46 0.88
Interest Cover Ratio Int Coverage (Qtr) 17.79 -319.17
Times Interest Earned Times Interest Earned (Qtr) 17.79 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.80 -550.76
EBIT Margin % EBIT Margin % (Qtr) 7.18 -775.74
EBT Margin % EBT Margin % (Qtr) 6.78 -827.89
Gross Margin % Gross Margin % (Qtr) 37.80 24.07
Net Profit Margin % Net Margin % (Qtr) 3.50 -830.34