Wednesday, October 3, 2018

Strong Mining Markets Could Help FLSmidth Finish Strong

The mining sector has definitely recovered, but that doesn't automatically make every player in the mining sector a good pick. I wasn't too excited about the near-term trading prospects for Danish mining and cement equipment company FLSmidth (OTCPK:FLIDY) (FLS.KO) back in June, and I'm not surprised that the shares have been flat since then, while Epiroc (OTCPK:EPOKY), Komatsu (OTCPK:KMTUY), Caterpillar (CAT), and Metso (OTCQX:MXCYY) have headed higher on stronger orders and improving margins.

Although FLSmidth's second-quarter margins were oddly weak, the order recovery was solid, and there have seen been a lot of corroborating data points on the strength of the mining sector and the opportunities over the next couple of years for equipment supplies like FLSmidth. I don't find these shares cheap enough to have a lot of appeal as a long-term holding, but I think circumstances are setting up for a better performance for the shares in the last quarter of the year and more trading-oriented investors may want to take another look. For longer-term investors, visibility on better margin leverage would be/is a key gating factor to a more robust valuation.

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Strong Mining Markets Could Help FLSmidth Finish Strong

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