HCSG: Hold
Published 17 Sep 2026, 04:36 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
First recorded assessment.
Neither a positive nor a negative classification meets the stated requirements. Review price and return, downside balance, business evidence, earnings support.
Supporting evidence
The company returned to profit
Net income was 22.7m, compared with -32.4m in the same quarter last year. Amounts are in USD.
Borrowing is lower relative to earnings
Net debt / EBITDA: -1.0× for HCSG, against 2.8× across 12 comparable peers.
Opposing evidence
Less cash remains for each dollar of profit
Cash after capital spending / profit: 1.2× for HCSG, against 2.7× across 6 comparable peers.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | 0.0% | 4.0% | $13.41 |
| Central | 5.0% | 4.4% | $21.54 |
| Stronger | 10.0% | 4.9% | $31.73 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 1.72 |
|---|---|
| cash | 159549000.0 |
| debt | 17729000.0 |
| years | 1.215605749486653 |
| growth | 4.984064341513217 |
| margin | 6.5940896516882495 |
| profit | 122953000.0 |
| cash_ok | True |
| debt_ok | True |
| growths | [8.45243127976476, 6.594154568627619, 3.3739741143988145, 2.686421325609434] |
| revenue | 1864594000.0 |
| downside | 38.977382671992565 |
| leverage | -0.9689474942780036 |
| multiple | 17.500960184355396 |
| free_cash | 148536000.0 |
| buy_hurdle | 26.09529059798774 |
| volatility | 42.19058119597548 |
| history_end | 2026-09-11 |
| reward_risk | 0.0 |
| annual_years | 5 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-06-30 |
| interest_cover | 60.405343159834175 |
| operating_cash | 154280000.0 |
| uncapped_growth | 4.984064341513217 |
| current_multiple | 12.779069767441861 |
| projected_margin | 4.4473454060215705 |
| historical_margin | 2.300601160354891 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Value operating cash flow or comparable earnings; deduct debt and other ownership claims where appropriate.
Four quarters · Passed. Four quarters ending 2026-06-30.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Annual record · Passed. 5 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $1.72, for four quarters ending 2026-06-30.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $1.72; statement-derived EPS is $1.79. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data b0e4bade9d57.