Harmonic Inc. (HLIT) Clearly Signals Buy-Into the Stock: Don’t ignore the signals

Harmonic Inc. (NASDAQ: HLIT) stock fell -0.68% on Friday to $11.76 against a previous-day closing price of $11.84. With 1.08 million shares changed hands, the volume of the stock remained heavier than its average volume of 0.79 million shares. During the session, the Communication Equipment company that operates in wider Technology sector, reached to the highest price of $12.02 whereas the lowest price it dropped to was $11.75. The 52-week range on HLIT shows that it touched its highest point at $12.22 and its lowest point at $8.25 during that stretch. It currently has a 1-year price target of $15.42. Beta for the stock currently stands at 1.00.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of HLIT was up-trending over the past week, with a rise of 7.79%, but this was up by 5.09% over a month. Three-month performance surged to 38.68% while six-month performance rose 22.12%. A look at the trailing 12-month EPS for HLIT yields 0.30 with Next year EPS estimates of 0.70. For the next quarter, that number is 0.10. This implies an EPS growth rate of 141.40% for this year and 45.23% for next year. EPS is expected to grow by 19.40% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 16.40%.

Float and Shares Shorts:

At present, 104.63 million HLIT shares are outstanding with a float of 101.83 million shares on hand for trading. On Aug 30, 2022, short shares totaled 9.1 million, which was 8.66% higher than short shares on Jul 28, 2022. In addition to Dr. Patrick J. Harshman as the firm’s Pres, CEO & Director, Mr. Sanjay Kalra serves as its Sr. VP & CFO.

Institutional Ownership:

Through their ownership of 97.38% of HLIT’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 48.96% of HLIT, in contrast to 47.13% held by mutual funds. Shares owned by individuals account for 4.61%. As the largest shareholder in HLIT with 16.52% of the stake, T. Rowe Price Investment Manageme holds 17,357,821 shares worth 17,357,821. A second-largest stockholder of HLIT, BlackRock Fund Advisors, holds 14,556,858 shares, controlling over 13.86% of the firm’s shares. Scopia Capital Management LP is the third largest shareholder in HLIT, holding 7,542,101 shares or 7.18% stake. With a 10.58% stake in HLIT, the T Rowe Price Small Cap Value Fund is the largest stakeholder. A total of 11,110,081 shares are owned by the mutual fund manager. The iShares Core S&P Small Cap ETF, which owns about 7.43% of HLIT stock, is the second-largest Mutual Fund holder. It holds 7,808,901 shares valued at 87.93 million. Vanguard Total Stock Market Index holds 2.92% of the stake in HLIT, owning 3,069,536 shares worth 34.56 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 30, 2022, HLIT reported revenue of $157.45M and operating income of $15.71M. Over the past year, revenue came in at $587.01M while operating income stood at $38.13M. It generated $14.84M net income for the quarter, which came to $34.70M over the last twelve months. The EBITDA in the recently reported quarter was $23.00M and diluted EPS was $0.14. EBITDA for the full year was $56.66M.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for HLIT since 6 analysts follow the stock currently. There are 3 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 1 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With HLIT analysts setting a high price target of $20.00 and a low target of $11.50, the average target price over the next 12 months is $15.42. Based on these targets, HLIT could surge 70.07% to reach the target high and fall by -2.21% to reach the target low. Reaching the average price target will result in a growth of 31.12% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. HLIT will report FY 2022 earnings on 03/01/2023. Analysts have provided yearly estimates in a range of $0.50 being high and $0.45 being low. For HLIT, this leads to a yearly average estimate of $0.48. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Harmonic Inc. surprised analysts by $0.07 when it reported $0.16 EPS against a consensus estimate of $0.09. The surprise factor in the prior quarter was $0.04. Based on analyst estimates, the high estimate for the next quarter is $0.11 and the low estimate is $0.09. The average estimate for the next quarter is thus $0.10.

Summary of Insider Activity:

Insiders traded HLIT stock several times over the past three months with 6 Buys and 7 Sells. In these transactions, 102,445 shares were bought while 113,092 shares were sold. The number of buy transactions has increased to 45 while that of sell transactions has risen to 42 over the past year. The total number of shares bought during that period was 763,946 while 630,412 shares were sold.

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