What Happened?

Shares of motion control and electronic systems manufacturer Helios Technologies (NYSE:HLIO) jumped 20.8% in the morning session after the company posted solid fourth-quarter results, with revenue narrowly exceeding analysts' expectations. But sales fell 7% from last year, hurt by a 10% drop in its hydraulics unit due to soft demand in agriculture and industrial markets. Despite the revenue decline, gross margins improved through lower material costs and operational efficiencies, helping to offset lower volumes and contributing to a strong EPS beat. 

Looking ahead, the company issued full-year 2025 revenue guidance, falling short of expectations, while its adjusted EBITDA forecast also came in lower than analysts had hoped. While margin expansion and an earnings beat were positives, weaker sales and conservative guidance make the road ahead look a bit uncertain.

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What The Market Is Telling Us

Helios’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Helios and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 14.6% on the news that KeyBanc analyst Jeffrey Hammond downgraded the stock's rating from Overweight to Sector Weight. The analyst added "The uncertainty around the company's future leadership creates an overhang that is difficult to ignore." 

This follows the move by HLIO's board to put Josef Matosevic, the Company's President, Chief Executive Officer and Director, immediately on a paid leave effective July 1, 2024. This action was in response to allegations of a potential violation of the Company's Code of Business Conduct and Ethics. Sean Bagan was appointed to serve as Interim President and Chief Executive Officer in addition to his role as Chief Financial Officer.

Helios is down 6.9% since the beginning of the year, and at $41.31 per share, it is trading 26.6% below its 52-week high of $56.28 from November 2024. Investors who bought $1,000 worth of Helios’s shares 5 years ago would now be looking at an investment worth $989.60.

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