Slowing Orders At Hurco A Growing Risk

I always considered a cyclical slowdown at Hurco (HURC) a “when, not if” proposition, and it seems like the when is an increasingly near-term concern. Fiscal first quarter results weren’t bad, but a third consecutive decline in orders shouldn’t be ignored, particularly when major players in the machine tool market are calling for a double-digit decline in orders in 2019 and European demand appears to be weakening.

Hurco remains undervalued relative to industrial sector norms, but I’m pretty cautious about the outlook for a host of industrial sectors, including “general manufacturing” and it’s tough to get ahead owning even undervalued stocks in a weak cycle for the sector. Consequently, while I still like Hurco as a business and the valuation doesn’t appear demanding, it’s tough to recommend the shares unless you have a fundamentally more bullish view on the prospects for the North American and EU economies over the next 12-24 months.

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Slowing Orders At Hurco A Growing Risk