If you follow the earnings reports of machine tool companies like Hurco (HURC), Hardinge (HDNG), and Gildemeister,
these are not happy-fun-times in the machine tool industry, though
there seems to be a big difference between companies that address
high-volume and low-volume markets (the smaller the target company, the
worse things appear to be). Likewise, companies with big exposure to
metal-cutting, including Kennametal (KMT), Atlas Copco (ATLKY.PK), and MSC Industrial (MSM), have been reporting pretty challenging market conditions in North America and Europe.
As Flow International (FLOW)
sells metal-cutting machine tools, you can probably guess where this is
going. While Flow is a leader in waterjet cutting equipment, a business
that seems under-penetrated, weak capex demand in the U.S. has made it
difficult for this company to make real headway. I do believe there may
be a worthwhile opportunity in these shares, but investors considering
them are going to need patience (and maybe a buyout) to see this story
work out.
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Should Investors Go With The Flow?
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