HMH
ConstructionValuation Breakdown
Construction and industrial firms have characteristics of both cyclical businesses (lumpy project-based revenue) and growth companies (expanding order books). This model blends two approaches 50/50: EV/EBITDA valuation (captures current earning power relative to peers) and FCF-based DCF (captures future cash generation potential). If EV/EBITDA produces a negative value (debt exceeds enterprise value), only DCF is used.
Valuation Track Record
Retroactive intrinsic value vs actual close price — HMH
Earnings Quality
Fiscal year 2025
Financial Forensics
Beneish M-Score · 2025
HMH exhibits a moderate risk of earnings manipulation, as indicated by a Beneish M-Score of -1.6236, which is above the manipulation threshold of -1.78. The earnings quality score of 28.1/100, particularly low cash conversion metrics, raises concerns about the sustainability of reported earnings.
- Beneish M-Score of -1.6236 is close to the manipulation threshold of -1.78, indicating potential earnings manipulation.
- Earnings Quality Score of 28.1/100 is low, with cash conversion at 0.0/100, suggesting poor quality of earnings.
- Significant reliance on receivables with a score of 100.0/100, which may indicate aggressive revenue recognition practices.
- DSRI of 0.9922 suggests that inventory is well-managed relative to sales, indicating no immediate concerns about inventory overstatement.
- GMI of 1.1638 indicates that gross margins are improving, which could be a positive sign for future profitability.
The ownership structure is somewhat concentrated, with the top five shareholders holding over 50% of the shares, which may lead to governance risks and potential conflicts of interest.
Investors should closely monitor HMH's earnings quality metrics and consider a deeper analysis of cash flow sustainability before making investment decisions. It may be prudent to wait for clearer signs of improved earnings quality before increasing exposure.
Generated by AI based on quantitative data. Not financial advice.
Quantitative Scores
Key Ratios
Company Overview
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