It’s not exactly news that the stock market is a
look-ahead mechanism for valuing companies, and that’s particularly
important to keep in mind today when looking at factory automation
companies. While business continues to deteriorate at Fanuc (OTCPK:FANUY)
(6954) and may well not truly bottom out until the fall of 2019, the
nearly 30% year-to-date move in the stock (well ahead of the average
industrial stock) against a roughly 18% drop over the past year suggests
that investors are already starting to look ahead to the recovery in
orders, revenue, and profits.
Valuing Fanuc has
always been problematic, as the company’s perceived quality has
generally earned it a premium (not wholly undeserved in my opinion).
Even though I’m modeling in a recovery starting in fiscal 2021 (the
fiscal year ending March 2021), including multiple years of double-digit
revenue growth and a sharp recovery in margins, the shares are well
ahead of where those cash flow streams suggest it should be. With that,
I’d prefer to wait for a cooldown among names like Fanuc and Yaskawa (OTCPK:YASKY) before stepping up.
Read more here:
Fanuc Forecasting The Bottom, While Investors Price In The Recovery
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