Weaker Orders Sapping Fanuc's Strength

The potential order weakness that troubled me in regard to Fanuc (OTCPK:FANUY) (6954.T) has come to pass, and with it are growing concerns regarding Fanuc’s near-term revenue and margin trends. While management cited trade tension among the issues impacting the business, there are signs elsewhere that automation equipment demand is slowing in a more cyclical fashion.

Fanuc is a well-run, innovative company that is placed to take advantage of ongoing global automation growth, including more sophisticated machine tools and robots. Even so, it’s tough to fight the tape and the near-term outlook for order growth is just not very good, while the company continues to sport a pretty robust valuation. A number of Japanese automation names have pulled back recently, including Fanuc, Yaskawa (OTCPK:YASKY), and THK (OTCPK:THKLY), but I’d recommend caution and perhaps letting the dust settle a bit before looking for bargains.

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Weaker Orders Sapping Fanuc's Strength