Hurco Grinding Through The Machine Tool Downturn

Although the shares were down on the day of the announcement, I can't really say that Hurco's (HURC) fourth quarter earnings surprised me all that much. True, revenue and margins were a little worse than I expected, and so too with orders, but this is what downturns look like and I had written previously that I expected at least two more soft quarters as the company worked through this downturn.

Additive manufacturing remains a long-term threat to machine tool companies like Hurco and DMG Mori (OTCPK:MRSKY), but I still see enough demand to support low single-digit long-term growth in Hurco's core high-spec market. I expect revenue to decline for the full year next year, but I believe Hurco will start seeing a recovery in orders (in the first or second quarter of 2020) and I do believe that low single-digit long-term revenue growth, double-digit EBITDA growth, and long-term FCF margins in the mid-single-digits can support a double-digit annualized return from here.

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Hurco Grinding Through The Machine Tool Downturn