Hills Ltd (ASX: HIL) has seen its share price zoom 204% higher over the past month, rising from 13 cents to 39.5 cents including 16% today.

Hills has completely changed tack on its business strategy – once being famous for producing the ‘Hills Hoist’ washing line, but is now focused on Technology, including security and CCTV, communications solutions, and the health care space with interactive TV systems and nurse call facilities.

And the change has done wonders for the company.

In the first half of this financial year (FY16), Hills looked down and out for the count after reporting a $69 million loss as revenues shrank from $227 million to just $164 million. Underlying net profit wasn’t much better coming in at $2.9 million.

However, earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $5.4 million – better than expected.

In early April, Hills notified the market that EBITDA for the second half would be better than the first and that its ‘back to basics’ strategy was gaining traction.

Another update earlier this week, highlighted the changes the company has made since 2012, including slashing debt from $130 million to $38 million in May 2016. Capex, the number of sites and staff have also all been rationalised and Hills is now much better placed to be profitable.

Additionally, Hills now has $182 million of unbooked tax losses to offset against future profits – which could see the company not pay tax for many years.

The company’s licencing agreement with Woolworths Limited (ASX: WOW) to sell its products through Masters and Big W contained an agreement on a guaranteed minimum annual royalty payment from Woolworths too – so Hills has some protection from the demise of Masters – and could now sell its product range through Masters or Mitre 10.

Foolish takeaway

On a rough valuation basis, Hills is now trading on a prospective EV/EBITDA ratio of around 12x (although that is conservative). That appears neither cheap nor expensive, and the company still has plenty of work ahead of it.

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Motley Fool writer/analyst Mike King owns shares in Woolworths. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.