Enthusiasm For Yaskawa Electric Seems To Be Running Ahead Of Reality

It’s not news that the stock market is a discounting mechanism, with investors frequently looking past dire near-term conditions and pricing in recoveries well ahead of the actual turns in businesses. We’ve seen that lately in a number of U.S. short-cycle manufacturing stocks (names like Parker-Hannifin (PH) and Rockwell (ROK)), where performance has been driven by evidence that the worst-case scenario is off the table and a late 2020/2021 V-shaped recovery is still in play.

In the case of Yaskawa Electric (OTCPK:YASKY) (6506.T), I think the nearly 30% move since my last update has been too much too soon, as investors seem eager (if not desperate) to buy into a China-centric recovery story. To be clear, I like Yaskawa’s leverage to markets like semiconductors, electronics assembly, and factory automation, but I believe the recovery in the share price is excessive relative to the sort of business recovery I expect to see.

To read the full article, click below:
Enthusiasm For Yaskawa Electric Seems To Be Running Ahead Of Reality

Yaskawa Electric Still Getting A Large Benefit Of The Doubt

It’s been a rough 2020 so far for Yaskawa Electric (OTCPK:YASKY) (6506.T). The shares have lost around a quarter of their value, and have more or less tracked the declines in the larger industrial space. While the market didn’t react particularly badly to the company’s fiscal fourth quarter results, where it missed its own operating income target by almost a third, a lot of that seemed to get priced into the shares in the months leading up to the announcement.

Even with a steep year-to-date decline, the shares sport a pretty robust valuation and many investors and analysts seem content to just roll with the punches and assume that the worst is already in sight for this factory automation manufacturer. I’m not so sanguine. I do see good long-term potential in servomotors, inverters, and robots overall, but I think the current price ignores some of the competitive risks to Yaskawa’s business, as well as meaningful ongoing challenges in many end-markets, and already prices in a very healthy recovery beyond 2020.

Follow this link for more:
Yaskawa Electric Still Getting A Large Benefit Of The Doubt

Investors Shrug Off A Soft Quarter From Yaskawa Electric

My biggest concern going into the calendar fourth quarter earnings cycle is that investor expectations for a 2020 recovery are set too high and that company guidance this time around may not be enough to support valuations that are already above historical averages. If Yaskawa Electric’s (OTCPK:YASKY) (6506.T) are anything to go by, those worries may be overdone.

Yaskawa had a soft quarter, but investors not only shrugged it off but seemed to embrace evidence that the worst is over … even though management’s guidance leaves a very challenging bar in place for the fiscal fourth quarter. While I still like Yaskawa’s business quite a bit, and I think the company is well-placed to leverage growth in automation across a range of industries (particularly in China), the valuation seems to already reflect that.

Continue here:
Investors Shrug Off A Soft Quarter From Yaskawa Electric

The Market Shrugs Off Another Weak Quarter From Yaskawa Electric

It’s certainly true that the stock market is a discounting mechanism that looks beyond current results in assessing a company’s value. But it’s also true that investors can get ahead of themselves, and particularly so with companies they like, and I think that’s the case at Yaskawa Electric (OTCPK:YASKY) now. Investors ignored another weak quarter from this leading automation player, content to assume that the bottom is in sight and results will soon start to improve from here.

I have no problem with the overall assumption that Yaskawa is bottoming out. My problem is that the market is assuming a growth rate from here that’s just too high (or using a discount rate that’s just too low), and I struggle to reconcile the likely path of Yaskawa’s earnings and cash flows with today’s valuation. I don’t like taking a negative stance on companies I like, and particularly when I do think they’re near a cyclical low, but I’m struggling to connect the valuation dots on a company already trading at over 18x FY21 EBITDA and nearly 14x FY22 EBITDA.

Click here for the full article:
The Market Shrugs Off Another Weak Quarter From Yaskawa Electric