As part of our ongoing series here at The Acquirer’s Multiple, each week we focus on one of the stocks from our Stock Screeners, and why it might be a deeply undervalued gem.
The stock this week is:
Hammond Manufacturing Co. Ltd (HMM.A.TO)
Hammond Manufacturing is a Canadian industrial company specializing in electrical enclosures, racks, cabinets, and power distribution solutions. Serving global customers in sectors ranging from telecommunications to energy infrastructure, Hammond’s broad product portfolio and long-standing reputation make it a steady industrial compounder often overlooked by the broader market.
What is IV/P (Intrinsic Value to Price)?
IV/P tells you how much value you’re getting relative to the stock’s price. If it’s greater than 1, the stock might be trading at a discount. If it’s much greater than 1 — it might be a deep value opportunity.
IV/P for Hammond Manufacturing: 6.60
That means:
For every $1 you invest, you’re potentially getting $6.60 of value.
That’s a massive margin of safety — and a rare find in today’s market.
Supporting Metrics:
- Free Cash Flow Yield: 22.9%
A sky-high FCF yield shows Hammond is generating substantial cash relative to its market cap — a powerful indicator of value. - Acquirer’s Multiple: 3.5
With an enterprise value (EV) of $133M and operating income of $38M, Hammond’s Acquirer’s Multiple comes in at just 3.5 — well below market averages. This signals deep value and suggests the company could be an attractive acquisition target or long-term compounder. - Return on Assets (5-Year Average): 7.8%
This indicates the company is currently performing well in terms of asset utilization compared to its historical performance and industry peers.
Why Might Hammond Be Undervalued?
Small Cap, Big Efficiency
With a market cap of just $106 million, Hammond remains under the radar — despite having operating income of $38 million and extraordinary asset returns.
No Flash, Just Fundamentals
Industrial stocks often lack the excitement of tech or biotech, but Hammond’s valuation and cash generation offer deep value to disciplined investors.
Quiet Compounder
With a low debt-to-equity ratio (25.38%) and consistent reinvestment, Hammond is quietly compounding value in a niche industrial segment.
Conclusion:
With an IV/P of 6.6, Hammond Manufacturing (HMM.A.TO) is trading at a dramatic discount to its intrinsic value. Its combination of robust free cash flow, low acquirer’s multiple, and operational consistency make it a textbook value stock. For investors seeking deep value in overlooked corners of the market, Hammond is worth a serious look.
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