It's been a decade to forget for many machine tool companies, as the 2008 recession hit many of them hard and the more recent weakness in natural resources and heavy machinery has knocked them back yet again. Hardinge (NASDAQ:HDNG), a small U.S. player in the space, has certainly seen better days, as the shares are about one-quarter lower than they were a decade ago on lower sales and weaker margins.
Why bother paying any attention to Hardinge? This is a small (less than $150 million in market cap and enterprise value) pure-play on the industrial economy and if/when manufacturing activity recovers, sales, margins, cash flows, and valuation multiples should all improve, and potentially quite significantly. While the shares have participated in the widespread post-election run, I believe relatively modest financial performance would be enough to lift these shares into the mid-teens.
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Hardinge Offers Meaningful Leverage To An Industrial Recovery