From SKF (OTCPK:SKFRY) to Kennametal (NYSE:KMT) to Fastenal (NASDAQ:FAST), there has been no shortage of data points confirming
that the present environment for industrial tools and components is
pretty lackluster. With that backdrop, there was no particular reason to
think that Hurco (NASDAQ:HURC)
was going to have a great quarter, but I would argue that this small
machine tool company is doing better than the valuation would otherwise
suggest.
Hurco's management has also chosen to make use of its
strong balance sheet, acquiring two other machine tool companies that
broaden its addressable market and should give HURC expanded sales and
margin opportunities down the road. I realize some investors won't buy a
cyclical company in the midst of the below-the-line part of the cycle,
but I believe mid-single-digit long-term revenue growth and further
margin leverage can support a fair value in the mid-$40s today,
suggesting significant undervaluation that more than rewards the
above-average risks.
Read the full article here:
Hurco In A Tougher Patch, But Using Its Balance Sheet To Build
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