Monday, March 19, 2018

Hurco Off To A Strong Start

Manufacturers continue to expand and upgrade their capital equipment, and that trend is benefiting small-cap machine tool manufacturer Hurco (HURC). As a company that makes things, Hurco is clearly very leveraged to the health of the global manufacturing economy, but particularly in Germany, the U.S., the U.K., France, and Italy. Although industrial production growth has slowed a bit recently, the overall trends remain healthy in the U.S. and Western Europe, and most industrial companies have guided toward a healthy 2018.

A bi-annual tradeshow in September of this year is likely to create some volatility in quarterly results (with orders slowing into the show, as many companies introduce new models/features at the show), but I expect that Hurco will generate double-digit revenue growth and at least come very close to double-digit operating margin. With the current share price still offering double-digit return potential, I don’t think it’s too late for the stock, but I do think the industrial recovery story is pretty mature at this point.

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Hurco Off To A Strong Start

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