Trying to call a bottom in the machine tool space is a good way to look foolish, but I think we're finally there - based not only on the commentary of companies like DMG Mori (OTCPK:MRSKY) and the results posted by Hurco (HURC) today but also looking at other trends and commentary in the industrial space. With this quarter, Hurco's orders have spent two quarters at close to 50% below the prior peak, and I believe the company will see sequential revenue growth in the next quarter and quite possibly a return to order growth.
Although this downturn has been brutal in its suddenness, which does create some challenges in managing costs, it hasn't been all that different in terms of magnitude relative to past downturns. Looking ahead, I expect healthy double-digit growth from Hurco over the next couple of years, with improving operating leverage as well. With the shares have meaningfully underperformed since my last update (when I turned neutral the near-term outlook), I think today's valuation offers an attractive upside to a short-cycle industrial recovery in 2021 at a very reasonable price.
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Hurco Seems To Have Reached Its Bottom, And Now On To The Recovery
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