HEO provides water treatment solutions, and is now trading at 27x times' Forward P/E (historical averages in the last few years range from 25x to 48x). In the 4Q-2023, HEO’s revenue grew 25% to $65M, beating estimates of $60M and EPS was in line with expectations. The company’s FY 2023 operating result was quite impressive, and growth was driven mostly organically, in addition to some acquisitions and foreign exchange tailwinds. The balance sheet is quite leveraged, however, with net debt of $51M, and net debt/EBITDA of around 2.7x. Overall, we think the company is executing quite well, $3.5 implies a return of around 40%, which we think could be achieved if the company continues to execute its growth strategy.
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