Harte Hanks Inc (NASDAQ: HHS)

Sector: Industrials Industry: Conglomerates CIK: 0000045919
Market Cap 21.27 Mn
P/B 1.07
P/E -3.90
P/S 0.13
ROIC (Qtr) -17.44
Div Yield % 0.00
Rev 1y % (Qtr) -17.03
Total Debt (Qtr) 21.76 Mn
Debt/Equity (Qtr) 1.09
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About

Harte Hanks Inc., a prominent player in the global customer experience industry, trades under the symbol HHS. The company's operations span across six service categories, namely data, marketing, sales, customer care, fulfillment, and logistics. Harte Hanks is dedicated to assisting clients in building robust customer relationships, creating interconnected customer experiences, and optimizing every customer interaction to achieve desired business results. The company's primary business activities encompass a broad spectrum of services and solutions....

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Investment thesis

Bull case

  • Strong tangible asset base of 91.99M provides 4.23x coverage of total debt 21.76M, indicating robust asset backing and low credit risk.
  • Tangible assets of 91.99M provide exceptional 37.43x coverage of deferred revenue 2.46M, showing strong service capability backing.
  • Retained earnings of 811.61M provide full 44.50x coverage of long-term debt 18.24M, indicating strong internal capital position.
  • Robust tangible asset base of 91.99M provides 5.86x coverage of working capital 15.70M, indicating strong operational backing.
  • Retained earnings of 811.61M provide strong 71.38x coverage of other current liabilities 11.37M, indicating earnings quality.

Bear case

  • Operating cash flow of 1.57M barely covers its investment activities of (1.96M), with a coverage ratio of -0.80, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.57M provides insufficient coverage of deferred revenue obligations of 2.46M, which is 0.64x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 1.57M shows concerning coverage of stock compensation expenses of 598000, with a 2.63 ratio indicating potential earnings quality issues.
  • Free cash flow of (387000) provides weak coverage of capital expenditures of 1.96M, with a -0.20 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (2.29M) show weak coverage of depreciation charges of 4.62M, with a -0.49 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Conglomerates
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HON Honeywell International Inc 155.07 Bn 32.79 4.14 34.58 Bn
2 MMM 3M Co 100.16 Bn 20.62 3.16 12.60 Bn
3 VMI Valmont Industries Inc 11.52 Bn 79.14 5.93 0.86 Bn
4 SEB Seaboard Corp /De/ 4.74 Bn 9.55 0.49 1.82 Bn
5 MDU Mdu Resources Group Inc 3.80 Bn 15.84 0.97 2.35 Bn
6 OTTR Otter Tail Corp 3.60 Bn 20.35 3.01 1.04 Bn
7 BBU Brookfield Business Partners L.P. 2.64 Bn -19.71 0.10 43.31 Bn
8 TTI Tetra Technologies Inc 1.44 Bn 11.77 2.33 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.42 1.07
EV to Cash from Ops. EV/CFO 24.94 26.27
EV to Debt EV to Debt 1.80 3.17
EV to EBIT EV/EBIT -17.16 28.37
EV to EBITDA EV/EBITDA 6.91 2.98
EV to Free Cash Flow [EV/FCF] EV/FCF -101.38 24.12
EV to Market Cap EV to Market Cap 1.84 2.07
EV to Revenue EV/Rev 0.24 3.10
Price to Book Value [P/B] P/B 1.07 0.16
Price to Earnings [P/E] P/E -3.90 -51.36
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 16.94
Dividend per Basic Share Div per Share (Qtr) 0.00 1.03
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -1.97
Interest Coverage Int. cover (Qtr) -8.23 4.08
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 55.96 -245.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 9.52 116.15
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -1.11
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 83.67 233.90
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -39.73 6.29
EBIT Growth (1y) % EBIT 1y % (Qtr) 94.27 58.90
EBT Growth (1y) % EBT 1y % (Qtr) 93.59 -70.32
EPS Growth (1y) % EPS 1y % (Qtr) 82.24 179.10
FCF Growth (1y) % FCF 1y % (Qtr) 94.56 22.76
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -11.97 19.56
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.80 0.64
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.01
Cash Ratio Cash Ratio (Qtr) 0.20 0.34
Current Ratio Curr Ratio (Qtr) 1.48 1.70
Debt to Equity Ratio Debt/Equity (Qtr) 1.09 -5.62
Interest Cover Ratio Int Coverage (Qtr) -8.23 4.08
Times Interest Earned Times Interest Earned (Qtr) -8.23 4.08
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.40 -14.03
EBIT Margin % EBIT Margin % (Qtr) -1.37 -16.67
EBT Margin % EBT Margin % (Qtr) -1.54 -20.17
Gross Margin % Gross Margin % (Qtr) 68.20 21.90
Net Profit Margin % Net Margin % (Qtr) -3.30 -21.67