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Hurco Companies Inc. Message Board

  • bot_feeder bot_feeder Jun 14, 2012 2:48 PM Flag


    Someone pointed out their price to book is about 1.

    Yes indeed. Also their book value is in pretty good categories from my standpoint. Cash, receivables, inventory. Now can't say the liquidation value would be 100% on things like inventory but then this company is not going to be liquidated.

    I prefer to see those sorts of assets than property plant and equipment. (which they only have a little of) I figure facilities assets tend to be illiquid and that when you spend capital to outfit a factory a lot of what was spent doesn't get recouped if the factory is ever bought by someone else because they have to refurbish the place to suit their particular business.

    So, anyway, price to book, a big plus as far as Hurco goes.

    Also, enterprise value to gross margin ratio, which I tend to look at as a surrogate for PE ratio since it should be less volatile with the ups and downs of the economy, EV/GM is about 1.5. I consider a company dirt cheap if that ratio is 1 or below. A good value at 2. And if that ratio is 3 I consider it a good value if it is a great company. (I believe Cisco for example has an EV/GM ratio of 3 which I consider a good value because I consider it a great company)

    So anyway, Hurco's EV/GM of about 1.5 looks good to me. But when a company has both a good EV/GM and also a good forward-looking PE ratio, (as is the case with Hurco), that's all the better. In fact due to the shaky economy I believe I've dumped all my industrial/tech stocks that don't show BOTH a good EV/GM AND forward-looking PE. (My other stocks are mining and mineral exploration stocks which are qualitatively very different businesses and I don't use the same valuation gauges on those that I use on the manufacturing companies)

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