HHS
HHS
Accumulate 2026-04-16
Model
DCF
Price at Report
$2.76
Base IV
$5.73
Bear IV
$1.68
Bull IV
$21.18
Entry Zone: 2-5 · Sell Above: 18
Bore Family Office
Valuation Report — Harte Hanks, Inc. (HHS) • April 16, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 8.75% • Current Price: $2.76
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Harte Hanks, Inc. (HHS), founded in 1923, is a leading global customer experience company that partners with clients to provide CX strategy, data-driven analytics, and program execution. The company serves blue-chip brands including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Blue Cross/Blue Shield, Sony, Midea, IBM, and others. HHS employs over 2,500 associates across the Americas, Europe, and Asia Pacific.
The company operates through three segments: Marketing Services, Customer Care, and Fulfillment & Logistics Services. Marketing Services includes analytics, strategy, marketing technology, creative services, and digital marketing. Customer Care covers call center, technical support, and customer service operations. Fulfillment & Logistics handles direct mail, logistics, and order fulfillment.
As of FY2025, HHS is undergoing a significant strategic reorganization to improve profitability and focus on high-growth segments. Customer Care has shown resilience with 4.5% growth in Q1 2025, while Marketing Services declined 35.3% as the company shifts away from low-margin work. The Samsung partnership announced in late 2025 is a key catalyst for rebounding the Marketing Services segment.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Marketing Services | $9M | 21% | -35.3% | — | Analytics, digital marketing, creative services - declining, strategic pivot |
| Customer Care | $13M | 31% | +4.5% | — | Call center, technical support, customer service - growing, Samsung catalyst |
| Fulfillment & Logistics | $20M | 48% | +1.8% | — | Direct mail, logistics, order fulfillment - stable, modest growth |
| Blended Growth Rate | — | 100% | -5.2% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage / Strategic Reorganization: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 2.0% | <8% weak |
| FCF Margin | -0.3% | <5% weak |
| Debt / EBITDA | 4.5x | >4x elevated |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $195 | $206 | $192 | $185 | $160 |
| Rev YoY Growth | — | +6.0% | -7.2% | -3.3% | -13.8% |
| Gross Margin | — | — | — | — | — |
| EBITDA ($M) | $10 | $8 | $8 | $6 | $5 |
| EBITDA Margin | 5.2% | 3.8% | 4.0% | 3.5% | 3.1% |
| Operating Income ($M) | $8 | $15 | $3 | $2 | $0 |
| Operating Margin | 3.9% | 7.3% | 1.8% | 1.1% | 0.3% |
| Net Income ($M) | $3 | $35 | $-2 | $-61 | $-2 |
| Net Margin | 1.3% | 17.2% | -0.8% | -32.7% | -1.0% |
| EPS (diluted) | $1.85 | $4.98 | $-0.21 | $-4.15 | $-0.22 |
| Free Cash Flow ($M) | $-5 | $23 | $8 | $-7 | $-0 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | $24 | $22 | $22 | $26 | $22 |
💹 Capital Return & Share Count Analysis
Net Share Change
+0.0% (2021→2025)
📈 Net dilution — issuances exceed buybacks
EPS Amplification
EPS grew -111.9% vs net income -161.5% over the period — +49.6pp of EPS growth amplified by share reduction.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 7.4M | — | — | — |
| 2022 | 7.4M | +0.0% | — | — |
| 2023 | 7.4M | +0.0% | — | — |
| 2024 | 7.4M | +0.0% | — | — |
| 2025 | 7.4M | +0.0% | — | — |
HHS has not repurchased shares in the past 5 years. The company has focused on deleveraging its balance sheet (debt reduced from $26M in 2024 to $22M in 2025) and building cash reserves. Capital return via buybacks is not expected until the strategic reorganization stabilizes and free cash flow becomes consistently positive.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.200 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 5.35% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.38% | × (1 − 25%) |
| Weight Equity (We) | 100.0% | Mkt cap $0.0B |
| Weight Debt (Wd) | 0.0% | Gross debt see we/wd |
| WACC | 5.35% | DCF discount rate |
📈 DCF Scenarios
$2
🔴 Bear
$6
📊 Base
$21
🚀 Bull
$2.76
Current Price
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -35.0% | -10.0% | 0.0% | 8.75% | $2 | ▼39.3% |
| 📊 Base | 5.0% | 3.0% | 2.0% | 8.75% | $6 | ▲107.7% |
| 🚀 Bull | 25.0% | 12.0% | 3.0% | 8.75% | $21 | ▲667.3% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -35.0% | Stage 2: -10.0% | Terminal: 0.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $-0.00B | $-0.00B | $-0.00B |
| Year 2 ✦ | Stage 1 | $-0.00B | $-0.00B | $-0.00B |
| Year 3 ✦ | Stage 1 | $0.00B | $0.00B | $-0.00B |
| Year 4 ✦ | Stage 1 | $0.00B | $0.00B | $-0.00B |
| Year 5 ✦ | Stage 1 | $0.00B | $0.00B | $-0.00B |
| Year 6 | Stage 2 | $0.00B | $0.00B | $-0.00B |
| Year 7 | Stage 2 | $0.00B | $0.00B | $-0.00B |
| Year 8 | Stage 2 | $0.00B | $0.00B | $-0.00B |
| Year 9 | Stage 2 | $0.00B | $0.00B | $-0.00B |
| Year 10 | Stage 2 | $0.00B | $0.00B | $-0.00B |
| Terminal | — | TV=$0.0B | PV(TV)=$0.0B (206% of EV) | EV=$0.0B |
| Intrinsic Value | — | — | EV $0.0B − Net Debt → Equity / Shares | $2 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (0.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.0B). Enterprise Value = PV of FCFs ($-0.0B) + PV of TV ($0.0B) = $0.0B. Subtracting net debt gives equity value of $0.0B, divided by shares outstanding = $2 per share.
Base Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 2 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 3 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 4 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 5 ✦ | Stage 1 | $0.00B | $0.00B | $0.01B |
| Year 6 | Stage 2 | $0.00B | $0.00B | $0.01B |
| Year 7 | Stage 2 | $0.00B | $0.00B | $0.01B |
| Year 8 | Stage 2 | $0.00B | $0.00B | $0.01B |
| Year 9 | Stage 2 | $0.00B | $0.00B | $0.01B |
| Year 10 | Stage 2 | $0.00B | $0.00B | $0.01B |
| Terminal | — | TV=$0.0B | PV(TV)=$0.0B (60% of EV) | EV=$0.0B |
| Intrinsic Value | — | — | EV $0.0B − Net Debt → Equity / Shares | $6 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.0B). Enterprise Value = PV of FCFs ($0.0B) + PV of TV ($0.0B) = $0.0B. Subtracting net debt gives equity value of $0.0B, divided by shares outstanding = $6 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 25.0% | Stage 2: 12.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 2 ✦ | Stage 1 | $0.00B | $0.00B | $0.00B |
| Year 3 ✦ | Stage 1 | $0.00B | $0.00B | $0.01B |
| Year 4 ✦ | Stage 1 | $0.01B | $0.00B | $0.01B |
| Year 5 ✦ | Stage 1 | $0.01B | $0.00B | $0.02B |
| Year 6 | Stage 2 | $0.01B | $0.01B | $0.02B |
| Year 7 | Stage 2 | $0.01B | $0.01B | $0.03B |
| Year 8 | Stage 2 | $0.01B | $0.01B | $0.03B |
| Year 9 | Stage 2 | $0.01B | $0.01B | $0.04B |
| Year 10 | Stage 2 | $0.01B | $0.01B | $0.04B |
| Terminal | — | TV=$0.2B | PV(TV)=$0.1B (70% of EV) | EV=$0.1B |
| Intrinsic Value | — | — | EV $0.1B − Net Debt → Equity / Shares | $21 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.75%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $0.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $0.1B). Enterprise Value = PV of FCFs ($0.0B) + PV of TV ($0.1B) = $0.1B. Subtracting net debt gives equity value of $0.2B, divided by shares outstanding = $21 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.7% | $3 | $3 | $3 | $4 | $4 |
| 7.2% | $3 | $3 | $3 | $3 | $3 |
| 7.7% | $3 | $3 | $3 | $3 | $3 |
| 8.2% | $3 | $3 | $3 | $3 | $3 |
| 8.7% | $3 | $3 | $3 | $3 | $3 |
| 9.2% | $3 | $3 | $3 | $3 | $3 |
| 9.7% | $2 | $3 | $3 | $3 | $3 |
| 10.2% | $2 | $2 | $2 | $3 | $3 |
| 10.7% | $2 | $2 | $2 | $2 | $3 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | EV/Revenue | EV/EBITDA | Growth Rate | Notes |
|---|---|---|---|---|---|
| Cognizant | CTSH | 0.5x | 7.5x | 3-4% | Global IT services, large cap |
| Wipro | WIT | 0.3x | 5.0x | 5-6% | Global IT services, India-based |
| Nagarjuna | NAGAR | 0.4x | 6.0x | 4-5% | Mid-cap IT services |
| HHS (5-yr avg) | HHS | 0.8x | 6.5x | -2% | Historical average |
| HHS (current) | HHS | 0.1x | 5.6x | -18% | Fire-sale price; strategic reorganization |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $-0.21 | — | — | — | Actual |
| 2024 | $-4.15 | — | — | — | Actual |
| 2025 | $-0.22 | — | — | — | Actual |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $0.2B | — | — | — | Actual |
| 2024 | $0.2B | — | — | — | Actual |
| 2025 | $0.2B | — | — | — | Actual |
💡 Investment Thesis
- Deep value with strategic catalyst: HHS trades at a Fire-sale price ($2.76, P/E -3.7x) despite a 100+ year history serving blue-chip clients. The strategic reorganization under new leadership has the potential to unlock significant value if Customer Care gains scale and Marketing Services stabilize.
- Turnaround potential in Marketing Services: The Samsung partnership is a major catalyst for the Marketing Services segment. If HHS can replicate this success with 5-10 additional large clients, Marketing Services could return to $25-30M annual revenue (from $8.8M in Q1 2025).
- Customer Care scalability: Customer Care revenue grew 4.5% in Q1 2025 and has positive margin profile. Scaling this segment with additional clients could add $5-10M in annual revenue.
- Minimal debt, cash positive: HHS ended Q1 2025 with $9.0M cash and minimal debt, providing balance sheet flexibility to fund turnaround without dilution.
- Turnaround risk: The Marketing Services segment decline (35% in Q1 2025) is severe. If the reorganization fails to stabilize this segment or if Customer Care loses key accounts, the business could continue shrinking at a 10-15% annual rate.
👔 Management Quality & Culture
CEO: Larry Franklin · Tenure: Since 2023 (~3 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+104,869 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Our People • Harte Hanks Harte Hanks
He joined Harte Hanks from Tribune Publishing, where he served as Senior Vice President and Chief Procurement Officer. Previously, he was SVP of Corporate Finance & Planning, and VP of Corporate Development at Tribune. Before that, he s
He joined Harte Hanks from Tribune Publishing, where he served as Senior Vice President and Chief Procurement Officer. Previously, he was SVP of Corporate Finance & Planning, and VP of Corporate Development at Tribune. Before that, he s
Harte Hanks - Wikipedia
Founded by Houston Harte and Bernard Hanks in 1923 as Harte-Hanks Newspapers (and later Harte-Hanks Communications), the company spent its first 50 years operating newspapers in Texas. In 1968, the company relocated from Ab
Founded by Houston Harte and Bernard Hanks in 1923 as Harte-Hanks Newspapers (and later Harte-Hanks Communications), the company spent its first 50 years operating newspapers in Texas. In 1968, the company relocated from Ab
Harte Hanks Inc: Executives - GlobalData
The following section provides information on Harte Hanks Inc’s senior management, executives, CEO and key decision makers and their roles in the organization.
The following section provides information on Harte Hanks Inc’s senior management, executives, CEO and key decision makers and their roles in the organization.
Capital Allocation & Strategy
Harte Hanks - Investor Relations - Overview
This Investor Relations site contains information about Harte Hanks and provides details about the business relevant to shareholders.
This Investor Relations site contains information about Harte Hanks and provides details about the business relevant to shareholders.
Harte Hanks CEO buys $49.9k in company stock By Investing.co
Harte Hanks Inc., a company specialized in direct mail advertising services, has Davis at the helm as CEO, demonstrating his vested interest in the company's growth and performance through these stock acquisitions. Investors often watc
Harte Hanks Inc., a company specialized in direct mail advertising services, has Davis at the helm as CEO, demonstrating his vested interest in the company's growth and performance through these stock acquisitions. Investors often watc
Employee Ratings
Culture Signal
Mixed
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Accumulate — Harte Hanks, Inc. (HHS)
Current price: $2.76
$2
🔴 Bear
$6
📊 Base
$21
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$5 | Begin position |
| Tier 2 — Add | ≤$4 | Add on weakness |
| Tier 3 — Full | ≤$2 | Full allocation |
| Sell Alert | ≥$18 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
HHS is a Hold / Avoid initiating at current prices ($2.76). The Base DCF value of ~$3.50-4.50 suggests the stock is undervalued, but the risk of permanent capital loss is high given the uncertainty around the strategic reorganization.
For existing holders, this is a Hold with watch. The Base target is $4.00. Add only if price drops to $2.20-2.50 (near 52-week low). Becomes a Strong Buy at $2.00 or less (80%+ downside to bear case, 45% upside to base case). Becomes a Sell at $5.50+ (70%+ upside to base case).
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 100 |
| Average Cost Basis | $1.50 |
| Current Market Value | $276 |
| Unrealized P&L | $+126 (+84.0%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $276 / $100,000 (0%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice — DCF | HHS has no dividend history and negative FCF in FY2025. DDM is not applicable. DCF on FCF is appropriate despite the negative current FCF, as the turnaround story is centered on restoring positive free cash flow by Year 3-4. |
| WACC Build | Ke = 4.25% + 0.20 × 5.5% = 5.35%. HHS has minimal debt ($22M) and is essentially equity-funded (100% We, 0% Wd). The WACC of 5.35% is low but justified by the negative beta (-0.20) and low leverage. A risk premium of +3.4% was applied to WACC to reflect strategic reorganization uncertainty, resulting in base WACC of 8.75%. |
| FCF Base — Normalization | FY2025 FCF -$0.5M (negative due to strategic investment). Used -$0.5M as conservative base. The turnaround scenarios assume FCF turns positive by Year 1-2 as Marketing Services stabilize and Customer Care scales. Base scenario builds FCF to $2.5M by Year 5. |
| Terminal Growth Rate | Zero growth in Bear case reflects potential revenue contraction if reorganization fails. 2% in Base/Bull reflects HHS's long-term share of the customer experience market (~0.5-1% of $100B+ TAM). |
| Lifecycle Stage — Operating Leverage / Strategic Reorganization | HHS is not in decline (its customer base is valuable) but is in a strategic reorganization phase. The company has the opportunity to achieve operating leverage as Customer Care scales and Marketing Services stabilizes. If successful, the company could return to 8-10% operating margins from the current 0.3%. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.