It is no great surprise that today's earnings report from machine tool manufacturer Hurco (HURC) is largely going unnoticed. Even though sales jumped 92% from last year, orders more than doubled (and the book-to-bill is over 1), and the company handily beat its estimate, only one analyst follows this stock and the company booked only $224M in revenue in its best year. In other words, it is a very small company that just falls through the cracks, more often than not.
My objective here is not to sing the praises of Hurco (though I do believe it is a fine company and currently undervalued), but rather to try and connect a few dots that the earnings from companies like Hurco might be telling us.
The Return of the Small/Mid-Sized Business?
Much of the recovery story so far has been dominated by the improved performance at major companies. Corporate earnings have clearly recovered, and the major North American stock indexes have rebounded as well.
At the same time, though, there has been a great deal of hand-wringing about the state of the job market. Small and mid-sized businesses (SMB) normally employee a large percentage of people in this country, and those businesses have not been hiring all that many people. Likewise, those who follow bank stocks have no doubt noticed that the pace of commercial lending has been poor as well, and it is largely SMBs that do that sort of borrowing.
These industrial earnings, though, may be a sign that things are getting better in this important segment of the economy.
Please click below to read the full piece:
Are Smaller Industrials Pointing to a Broader Recovery?
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