Hexagon AB (publ)

HXGBY

Hardware, Equipment & Parts · Technology

Price

$8.14

-0.11 (-1.33%)

Market Cap

$21.85B

Exchange

Other OTC

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count rising — dilution

+3.8% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 2.61B (2021) → 2.71B (2025)

Hexagon AB is a Swedish technology company that makes sensors, software, and measurement tools used to collect and analyze data about the physical world. Its products help factories run more efficiently, help construction and mining companies map terrain, and help manufacturers build things with extreme precision. Hexagon is one of the largest providers of industrial measurement and geospatial technology in the world.

The company earns money by selling hardware like laser scanners and GPS devices, along with software licenses and increasingly recurring software subscriptions. Hexagon operates globally, with strong revenue across Europe, North America, and Asia, and generates roughly $5 billion in annual revenue. Its competitive advantage comes from combining hardware and software into integrated systems that are deeply embedded in customers' workflows, making it costly to switch. The key growth driver is the ongoing push to automate factories and construction sites, though slowing industrial spending or delays in that automation trend could weigh on results.

Winston Score History

Score breakdown

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Quality

Gross Margin

62.8%

Premium pricing power — 62.8% gross margin

Operating Margin

24.1%

Excellent — 24.1% operating margin

ROCE

1.5%

Weak — 1.5% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-6.9%

Shrinking sales (-6.9% YoY)

EPS YoY

+108.1%

Earnings growing fast (108.1% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

80%

Modest — 80% of profit becomes cash

FCF Margin

23.7%

Converts sales into free cash efficiently (23.7%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

Debt / Equity

0.26

Conservative — low debt load (0.26)

Interest Cover

9.60x

Comfortably covers interest (9.6x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

10.7x

Attractive valuation — P/E 10.7

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

-12.5

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield

1.94%

Small dividend — 1.94% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+15.5%

Dividend growing fast (15.5% YoY)

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