Harmonic Inc. Common Stock (HLIT)

FairStock Score: 20/100 — RISKY

Key Financials

Strengths

• Generates $138 million in annual free cash flow (11.7% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.35, providing financial flexibility

Concerns

• Trades significantly above Graham Number ($1) with negative 1095% margin of safety—limited downside protection
• Currently unprofitable—sustained losses could lead to dilutive capital raises or balance sheet deterioration
• Revenue declining at 123.9% year-over-year signals potential demand weakness or market share loss
• Altman Z-Score of -1.6 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Harmonic Inc. Common Stock is a micro-cap technology company valued at $1.2 billion. Revenue stands at $361 million, though the company is currently unprofitable. From a quality standpoint, Harmonic shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of -1.6 warrants caution. On valuation, the stock is commanding a steep 1043.0x multiple, with trades far above its Graham Number ($1) with no margin of safety. Growth dynamics show revenue growing at -123.9% and profit growth of -243.8%. Our composite FairStock Score of 20/100 reflects below-average fundamentals overall. Without profitability, this remains speculative—suitable only for those with high risk tolerance and a long time horizon.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $138 million in annual free cash flow (11.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 1043x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer