Hurco Rebounding With The Machine Tool Cycle

With machine tool orders picking up around the world, these are better days for Hurco (HURC), a small and somewhat specialized manufacturer of machine tools. The shares have reflected at least some of the improving market conditions, with the stock up over a third over the past year, beating the S&P 500, but lagging fellow small-cap tool manufacturer Hardinge (HDNG) over that time.

This past year (2017) marked a return to growth in the industry and a switch from the “peak to trough” to “trough to peak” cycle. If this next cycle is anything like the past, there should be another three to five years of growing orders, fueled by ongoing factory automation, the replacement of older, inefficient tools, and growth in markets like aerospace. Even if this cycle is on the shorter end, Hurco should be looking at a few years of revenue growth and margin leverage opportunity, and management has shown in the past that they can capitalize on healthy markets.

Valuation is tricky. Cash flow-based modeling in such a cyclical industry is hard and it tends to lead toward undervaluing companies on the way up and overvaluing them on the way down. Moreover, there are opportunities for Hurco to exceed my expectations in the U.S. and with gross margin improvement. So although the shares aren’t especially cheap on a DCF basis, a 7.5x multiple to my 2018 EBITDA estimate offers some additional upside.

Read more here:
Hurco Rebounding With The Machine Tool Cycle

Hurco Doing A Little Better

I can't really complain about the post-election performance of Hurco (NASDAQ:HURC), as this small manufacturer of machine tools has seen its shares rise almost a third since the election. That's not out of line with what many smaller industrial-focused names have seen, as fellow machine tool company Hardinge (NASDAQ:HDNG) is up close to 30% since that time and welding equipment manufacturer Lincoln Electric (NASDAQ:LECO) is up more than 20% while the much larger (and less U.S.-focused) DMG Mori (OTCPK:MRSKY) is up around 15%.

I believe Hurco can still look forward to stronger economic conditions in both the U.S. and Germany, and the company should start to see even more benefits from its 2015 acquisitions of Milltronics and Takumi now that it has used a recent industry trade show to reintroduce and relaunch the brands. I'm not expecting Hurco to get back to the pre-2008 experience of gross margins in the mid-to-high 30%'s and operating margins in the mid teens, but I do expect the company to modestly outgrow its sector and generate solid consistent performance, supporting a fair value closer to $40 today.

Read the full article here:
Hurco Doing A Little Better

Hardinge Offers Meaningful Leverage To An Industrial Recovery

It's been a decade to forget for many machine tool companies, as the 2008 recession hit many of them hard and the more recent weakness in natural resources and heavy machinery has knocked them back yet again. Hardinge (NASDAQ:HDNG), a small U.S. player in the space, has certainly seen better days, as the shares are about one-quarter lower than they were a decade ago on lower sales and weaker margins.

Why bother paying any attention to Hardinge? This is a small (less than $150 million in market cap and enterprise value) pure-play on the industrial economy and if/when manufacturing activity recovers, sales, margins, cash flows, and valuation multiples should all improve, and potentially quite significantly. While the shares have participated in the widespread post-election run, I believe relatively modest financial performance would be enough to lift these shares into the mid-teens.

Read the full article here:
Hardinge Offers Meaningful Leverage To An Industrial Recovery

Hurco Laboring Hard, But With Little To Show For It

My expectations back at the start of this year were that it would be a very tough year for the machine tool industry. It has managed to be even worse, and Hurco (NASDAQ:HURC) has definitely seen a significant negative impact from that market weakness. While an upcoming trade show next week could help drive some orders, and market participants seem to think that the North American market is bottoming out, the reality is that there aren't a lot of leading indicators to make an investor feel really confident right now.

I suppose this may be a time where Hurco's relative obscurity is an asset. While the business has most definitely weakened, the stock is down 5% over the past year and about 10% since my last update. That's worse than comparables like Hardinge (NASDAQ:HDNG), DMG Mori Co. Ltd. (OTCPK:MRSKY), and Okuma (OTC:OKUMF), but it certainly could have been worse given the sharp declines in orders and the margin weakness. Looking ahead, I do continue to believe that Hurco is undervalued, but I think the recovery could be a more protracted, patience-testing process than some investors will want to endure.

Read the full article here:
Hurco Laboring Hard, But With Little To Show For It

Seeking Alpha: Orders, Revenue, And Margins Continue To Expand At Hurco

Investors continue to fret about the health of the manufacturing sector in the U.S. and Germany, but Hurco (NASDAQ:HURC) continues to follow its own successful path. This small manufacturer of precision machine tools has delivered another solid quarter, lifting its full-year revenue growth back into the mid-teens and starting off the next fiscal year with a good order book and margin strength.

Looking ahead, there are still solid reasons to be bullish. The company's efforts in additive manufacturing / 3D printing aren't likely to make a significant difference in the near term, but the introduction of new control technology very well might. Hurco is small enough that it can move independently of the larger machine tool industry, but if manufacturing activity in Germany and U.S. can expand in 2015 Hurco ought to do well.

Read more here:
Orders, Revenue, And Margins Continue To Expand At Hurco

Seeking Alpha: Hurco Delivers Once Again

Companies leveraged to metalworking have seen pretty mixed performance in both their reported financials and stock performance this year. Hardinge (NASDAQ:HDNG) and Kennametal (NYSE:KMT) are both down double-digits on a year-to-date basis (about 22% and 15%, respectively), while MSC Industrial (NYSE:MSM) (a distributor, not a manufacturer) is up more than 12% and Hurco (NASDAQ:HURC) is up close to 50%.

I continue to be bullish on Hurco. The company's announcement in mid-July of a patent on combination 3D-printing and CNC machining certainly got some attention, but the basic underlying business at Hurco is progressing well and I believe that is the more important factor. I do have some concerns about the sustainability of order growth and gross margins, but these shares continue to look undervalued to me.

Read the full article here:
Hurco Delivers Once Again

Seeking Alpha: Overlooked Hurco Still A Good Play On Europe's Recovery

Never let it be said that I won't go to some lengths to find good ideas, particularly in the industrial space. Following recent pieces on such household names (alas, there's no sarcasm or irony font) like KUKA (OTC:KUKAY), a German industrial robot company, and Semperit (OTC:SEIGY), an Austrian rubber products company, I turn back home with a quarterly update on Hurco (HURC), an American machine tool company that generates about two-thirds of its revenue in Europe, and particularly in Germany.

Hurco remains a difficult company to benchmark, as its focus on user-friendly high-spec machines for small manufacturing jobs (either small companies or larger companies doing small/prototype batches) sometimes puts it outside the overall trends in machine tool activity in North America and Germany. Likewise, Hurco just isn't that much like DMG Mori Seki (OTCPK:MRSKY) (GIL.XTA), Makino (OTCPK:MKMLF), or Okuma (OTC:OKUMF), and privately-held Haas Automation isn't any help either as a comp. All of that said, I believe the Hurco story is developing well and the company remains a good play on the improving economic and manufacturing activity in Europe.

Please follow this link for more:
Overlooked Hurco Still A Good Play On Europe's Recovery

Seeking Alpha: Hurco May Be Seeing The Turn

Machine tool manufacturer Hurco (HURC) has now logged two consecutive quarters with revenues above my expectations, and order flows appear to be improving. Combine that with improving orders reported by German and American machine tool associations and ongoing optimism regarding Europe and North America from Japan's machine tool association, as well as nascent signs of an industrial recovery Hurco's key European market, and maybe a little optimism is not out of place.

Investors considering Hurco as a way to play improving manufacturing conditions in Europe and North America should keep a few things in mind. This is an very illiquid stock and it is effectively unfollowed on Wall Street. It is also important to remember that machine tools are both deeply cyclical and erratically so - this recovery could disappear pretty quickly if issues like the dispute between Ukraine and Russia linger or worsen. It remains a significantly undervalued stock, though, and one that I believe is worth a closer look for investors who can bear the risks.

Continue here:
Hurco May Be Seeing The Turn

Seeking Alpha: Challenging Markets Still Weighing On Hurco

At some point investors are going to tire of waiting for a recovery at Hurco (HURC) and they are going to move on to other names leveraged to industrial markets in Europe and the U.S.. I'm not at that point yet. While I do have concerns that Hurco is losing share to Asian rivals in both Europe and North America, I believe the discrepancies still have more to do with Hurco's focus on short-run systems and smaller customers.

The machine tool market is highly cyclical and tied to global manufacturing activity, but there is still scope for Hurco to gain share with its product development and marketing efforts. These shares have basically no coverage on the Street and the low volume suggests that is likely to continue (covering Hurco isn't a particularly promising money-making opportunity for a sell-side firm). Nevertheless, at a small premium to tangible book and with a potential recovery in the company's key markets in 2014, I believe these shares remain quite cheap.

Follow this link for the full article:
Challenging Markets Still Weighing On Hurco

Seeking Alpha: Should Investors Go With The Flow?

If you follow the earnings reports of machine tool companies like Hurco (HURC), Hardinge (HDNG), and Gildemeister, these are not happy-fun-times in the machine tool industry, though there seems to be a big difference between companies that address high-volume and low-volume markets (the smaller the target company, the worse things appear to be). Likewise, companies with big exposure to metal-cutting, including Kennametal (KMT), Atlas Copco (ATLKY.PK), and MSC Industrial (MSM), have been reporting pretty challenging market conditions in North America and Europe.

As Flow International (FLOW) sells metal-cutting machine tools, you can probably guess where this is going. While Flow is a leader in waterjet cutting equipment, a business that seems under-penetrated, weak capex demand in the U.S. has made it difficult for this company to make real headway. I do believe there may be a worthwhile opportunity in these shares, but investors considering them are going to need patience (and maybe a buyout) to see this story work out.

Please click here for more:
Should Investors Go With The Flow?

Seeking Alpha: Hurco Navigating A Tough Market Reasonably Well

As a tiny industrial company focused around capital equipment and generating more than half of its revenue from Europe, it shouldn't surprise anyone that Hurco (HURC) is seeing some challenging operating conditions. That said, the company is managing this tough market reasonably well and while the next couple of quarters are likely to be touch-and-go, the long-term potential of this company ought to make it a solid candidate for small-cap investors.

Please follow the link for more:
Hurco Navigating A Tough Market Reasonably Well

Seeking Alpha: Earnings Recap - Hurco's Results Surpass Estimates

Hurco (HURC) is a tiny industrial company with almost no coverage, but size and popularity are no barrier to solid performance. Once again Hurco surprised investors with better than expected financial results, and while the company's largest market is seeing tougher conditions, the value in this stock is still worth considering.

Another Solid Quarter
Hurco reported 29% revenue growth for its fiscal first quarter, with Europe leading the way at 41% growth. Sales in North America rose 14%, while sales to Asia-Pacific rose 19% (but are only about 12% of the total). On a unit basis, North America saw 4% growth, while European shipments grew 25%.

Click the link to read more:
Earnings Recap: Hurco's Results Surpass Estimates

Seeking Alpha: Hurco Delivers A Good Q4, But Europe's A Worry

Machine tool manufacturer Hurco (NASDAQ: HURC) continued to ride the wave of improving conditions in the global industrial economy during the fourth quarter. While the company still looks undervalued on the basis of its long-term prospects, investors in this under-followed capital equipment company may well worry about the order situation. If 2012 does see Europe tip over into recession, the timeline for Hurco to realize its potential will get that much longer.

Solid Results Across The Board
Hurco reported that its fourth-quarter revenue jumped 40% - topping the lone analyst estimate by about 8%. North America continues to be the growth leader, with sales up 60% this quarter on a 38% increase in unit shipments. Europe remains the largest part of its business, with sales up 39% and units up 18%. Asia-Pacific was disappointing this quarter, as revenue fell 4% on a 6% decline in volume.

Read more here:
Hurco Delivers A Good Q4 But Europe's A Worry

Seeking Alpha: Tiny Hurco Looks For A Big Recovery

The global recovery has been largely unimpressive and uneven, with stubborn unemployment in the U.S., sovereign debt and bank capital worries in Europe, and inflation worries in many of the fast-growing emerging markets. That has led to an uneven recovery in tiny machine tool company Hurco (HURC). Although Hurco has been punished along with most industrial concerns this year and there are definitely reasons to worry about the company's large European exposure, value-oriented investors interested in “companies that make stuff” should definitely consider this name as a 2012 recovery idea.

Click the link for more:
Tiny Hurco Looks For A Big Recovery

Seeking Alpha: Are Smaller Industrials Pointing To A Broader Recovery?

It is no great surprise that today's earnings report from machine tool manufacturer Hurco (HURC) is largely going unnoticed. Even though sales jumped 92% from last year, orders more than doubled (and the book-to-bill is over 1), and the company handily beat its estimate, only one analyst follows this stock and the company booked only $224M in revenue in its best year. In other words, it is a very small company that just falls through the cracks, more often than not.

My objective here is not to sing the praises of Hurco (though I do believe it is a fine company and currently undervalued), but rather to try and connect a few dots that the earnings from companies like Hurco might be telling us.

The Return of the Small/Mid-Sized Business?
Much of the recovery story so far has been dominated by the improved performance at major companies. Corporate earnings have clearly recovered, and the major North American stock indexes have rebounded as well.

At the same time, though, there has been a great deal of hand-wringing about the state of the job market. Small and mid-sized businesses (SMB) normally employee a large percentage of people in this country, and those businesses have not been hiring all that many people. Likewise, those who follow bank stocks have no doubt noticed that the pace of commercial lending has been poor as well, and it is largely SMBs that do that sort of borrowing.

These industrial earnings, though, may be a sign that things are getting better in this important segment of the economy.

Please click below to read the full piece:
Are Smaller Industrials Pointing to a Broader Recovery?