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Helios (HLIO) Stock Gains 46% YTD: What's Driving the Rally?

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Shares of Helios Technologies, Inc. (HLIO - Free Report) have rallied notably since the beginning of 2021. Impressive financial performances, solid fundamentals and healthy growth opportunities seem to have strengthened sentiments for the stock.

The Sarasota, FL-based company belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the top 27% (with a rank of 69) of more than 250 Zacks industries. Helios’ market capitalization is $2.5 billion and it currently carries a Zacks Rank #2 (Buy).

Year to date, the company’s shares have gained 45.5% compared with the industry’s growth of 5.8%. Notably, the S&P 500 has risen 16.6% and the sector has grown 12.7% during the same period.

Zacks Investment ResearchImage Source: Zacks Investment Research

Factors Influencing the Stock

Since the beginning of 2021, Helios has released results for the fourth quarter of 2020 and the first quarter of 2021. Earnings surpassed the Zacks Consensus Estimate by 46.34% in the fourth quarter and 33.78% in the first quarter, with respective sales beats of 7.91% and 18.32%. In the last-reported quarter, the company’s earnings expanded 77% year over year on the back of 58% growth in net sales.

Impressive performances and growth prospects seem to have favored the company’s share price hike year to date. Notably, solid product offerings, healthy demand in end markets,  especially health, marine, agriculture and others, and efforts to expand capacity are tailwinds. Helios’ diversification strategy, as well as productivity enhancements and efforts to deleverage balance sheet are also aiding the company.

In addition, Helios’ acquisitions, so far in 2021, are likely to have strengthened the stock’s attractiveness. Notably, the company signed an agreement to acquire NEM S.r.l in June while also agreeing to purchase the electronic control systems and parts business of Shenzhen Joyonway Electronics & Technology Co., Ltd. Helios also acquired assets of the engineering solution provider, BJN Technologies, LLC, in January. Further, its commitment toward rewarding shareholders through dividends is impressive.

For 2021, Helios anticipates non-GAAP earnings of $3.30-$3.50 per share, higher than $2.75-$3.10 expected previously. Revenues for the year are expected to be $740-$750 million, up from the prior-guided range of $675-$705 million. Adjusted earnings before interest, taxes, depreciation and amortization are anticipated to be $170-$180 million, up from the previously guided range of $155-$170 million.

The consensus estimate for the company’s earnings is pegged at $3.40 per share for 2021 and $3.83 per share for 2022, marking an increase of 13% and 10.1% from the respective 60-days-ago figures. Also, the consensus estimate for the second-quarter earnings improved from 77 cents per share to 86 cents per share. Such upward revisions in earnings estimates are reflective of healthy operating conditions for the company.

Helios Technologies, Inc Price and Consensus

Helios Technologies, Inc Price and Consensus

Helios Technologies, Inc price-consensus-chart | Helios Technologies, Inc Quote

Helios’ Performance Versus Industry Players

Helios’ performance in the year-to-date period has been better than Nordson Corporation (NDSN - Free Report) , Barnes Group, Inc. (B - Free Report) and Altra Industrial Motion Corp. (AIMC - Free Report) . These companies belong to the same industry as Helios. In the year-to-date period, Nordson’s shares have gained 9.6%, whereas that of Barnes and Altra Industrial expanded 0.7% and 18.3%, respectively.

Notably, Nordson currently sports a Zacks Rank #1 (Strong Buy), whereas both Barnes and Altra Industrial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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