We pick the stocks, we start the research, you ring the register!
          |
07-06-2007 HINT - Hill International
CURRENT PRICE: $7.45
TYPE OF PLAY: VALUE/SECTOR STRENGTH/TECHNICAL ANALYSIS
Quick Facts:
*Added to the Russell Microcap Index on June 26th,2007
|
Founded in 1976, Hill International is the largest independent construction management (CM ) firm in the United States. They are also the largest constructions claims firm in the world. With over 1500 employees and 70 offices worldwide, they offer construction consulting and support services from preconstruction through delivery. They were ranked 3rd Fastest-Growing A/E/C Consulting Firm in the United Kingdom by Building Building Website and on June 11th, featured with a cover story by ENR Magazine, Story Link. This issue also ranked them #10 (higher than KBR) in the Top 100 Construction Managers-for-fee category Story Link, and #9 on Top 100 Program Manager 2007 list above FWLT and KBR Story Link.
Recent developments
EARNINGS:
On May 14th, Hill International reported that revenue for the first quarter of 2007 rose to $62.9 million, an increase of 71.0% from the first quarter of 2006. Total backlog for the first quarter of 2007 increased to $257 million. Twelve-month backlog at the end of the first quarter of 2007 grew to a record $134 million. Aside from the robust quarterly numbers, Hill's Chairman and CEO commented: "We intend to build upon this strong performance during the remainder of 2007 and beyond." The conference call was very upbeat and mentioned margin expansion in the future. We note that Hill's top line has grown at a compounded rate of more than 20% per year for the last five years which indicates a sustained growth trend rather than one-time results. Furthermore, we are impressed by their revenue mix which includes federal, state, local, regional and even foreign government contracts. They have expanded into these areas while maintaining core private sector contracts as the majority.
NEW CONTRACTS:
Since the last quarterly earnings report, Hill International has continued to procure new contracts consistently. On May 21st, the joint venture of Hill International, LiRo Engineers, Lemley International and HDR received a contract from the New York Metropolitan Transportation Authority to provide construction management services during extension of the No. 7 Subway Line in New York City. Story Link
On May 23rd, they were awarded a contract to manage the construction of major road, highway and bridge projects throughout Serbia.Story Link
On May 24th, they were awarded significant new task orders to provide construction management support services in connection with the Iraq Reconstruction Program.Story Link
On May 30th they received a contract from Abu Dhabi National Hotels Co. to provide project management services during design and construction of a new 5-star hotel and beach resort located in Abu Dhabi, United Arab Emirates. Story Link
This mix of contracts displays not only their expertise in gaining new business consistently but is also indicative of the extensive mix of projects and geographic reach which will sustain their currently high growth rate in the future.
ACQUISITIONS:
In September 2006 they completed the Knowles acquisition giving them a strong foothold in Europe. Note that this is accretive to earnings going forward.
The recent acquisition of KJM KJM Website Link was effective May 1 2007. This company will give Hill a strong presence in the Western United States that they had previously lacked. At a bargain price of just over $9 million in cash and restricted stock, they gained a profitable arm in a needed area that is generating over $16 million in revenues and will be immediately accretive to earnings.
INDUSTRY:
Despite the slowing housing market (which Hill International has virtually NO exposure to), industrial spending continues to be growing worldwide and is expected to continue. The global industrial market continues to be extremely large with $4.6 Trillion in 2006 Worldwide (Estimated). Program/Construction Management Fees for ENR's Top 100 U.S. PM/CM Firms were up 18% to $8.7 Billion in 2006, from $7.4 Billion in 2005.
Technical analysis
From a technical standpoint, the stock has been in a gradual uptrend since May and a longer term uptrend since August of 2006. It has worked its way up over the 50 day moving average and has been establishing a solid base to advance from. Importantly, the RSI remains strong and Stochastics are in the middle of their ascent higher
Chart Courtesy of http://www.stockcharts.com
More about the company
The Richter family, which runs the company, continues to hold over half of the company's outstanding shares. This insures that they have a vested stake in shareholder value as well as the company's growth. Anyone who is interested in Hill International should definitely look at the vast assortment of projects summarized and sorted by industry on their website: HINT projects page