HURCO: A WELL DESERVED BREAK(OUT) cont.
Thursday May 22 9:19 AM EDT
Company Press Release
Source: Hurco Companies, Inc.
Hurco Reports Second Quarter Results
Hurco Companies, Inc. (Nasdaq:HURC) today announced results for its
second fiscal quarter, which ended April 30, 1997. Net income for the
second quarter of fiscal 1997 was $6,201,000, or $.93 per share,
compared to $1,031,000, or $.19 per share, for the corresponding period
a year ago. For the first six months of fiscal 1997, net income totaled
$7,217,000, or $1.08 per share, compared to $1,603,000, or $.29 per
share, for the corresponding 1996 period.
The dramatic increase in net income for both the second quarter and
first half of fiscal 1997 was due principally to the receipt in the
second quarter of licensing fees of $5,136,000, net of expenses and
taxes, nearly all of which was attributable to a settlement agreement
with one of the defendants in the on-going patent litigation brought by
the Company's subsidiary, IMS Technology, Inc., against various
manufacturers and end-users of computer numerical controls for machine
tools.
Proceeds from the settlement agreement were used to reduce outstanding
borrowings. Exclusive of the benefits of licensing fees, net income for
the second quarter
and first half of fiscal 1997 increased approximately 3% and 48% over
the corresponding fiscal 1996 periods due primarily to decreased
interest expense as a result of debt reduction. In addition, margins
were favorably affected by an increased percentage of higher-margin
European sales in the Company's total sales mix.
Sales and service fees for the second quarter of fiscal 1997 were
$22,581,000, compared to $26,095,000 for the corresponding period in
fiscal 1996. Sales and
service fees for the first six months of 1997 were $44,589,000, compared
to $49,319,000 for the first half of fiscal 1996. Both the first and
second quarters of
fiscal 1996 were marked by unusually high shipments of machine tools, as
the increasing availability of products from the Company's contract
manufacturers
permitted an accelerated reduction of a near-record backlog of unfilled
orders received in fiscal 1995. Shipments in the first half of fiscal
1997, which did not have
the benefits of a similar backlog, were more reflective of current
demand, with the decline during the second quarter being experienced
primarily in the U.S. market.
New order bookings during the second quarter of fiscal 1997 were
$22,930,000, a decrease of approximately 4% from the $23,926,000
reported for the corresponding period of fiscal 1996 and slightly higher
than the $21,238,000 reported for the first quarter of fiscal 1997.
Although the U.S. dollar value of machine
tool orders during the 1997 second quarter increased slightly over the
corresponding 1996 period, the increase was more than offset by a
decline in orders for
CNC control systems from original equipment manufacturers and from the
metal fabrication industry. International orders represented
approximately 50% of new
order bookings for the second quarter of fiscal 1997 compared to 47% for
the immediately preceding fiscal quarter and 49% for the second quarter
of fiscal 1996.
Backlog at April 30, 1997 was $7,500,000 compared to $7,300,000 at
January 31, 1997.
The Chart.
From a high of 22 in 1989 to a low of 2 in 1993, HURC has a busy chart. Currently there are 2 active chart patterns. The longest standing pattern is a symettrical triangle ranging from 12/95 to the present, offering resistance at 6 5/8 and support at 5 1/4. Next is an inverted head and shoulders pattern ranging from 12/96 to the present, offering resistance at 6 1/8 and support at 5 7/16. This resistance has been tentatively broken at the close on 8/8/97 with the stock closing at 6 1/4. With the two resistance lines in close proximity, it is a possibility that a significant breakout may soon occur. The stock trades rather thinly averaging less than 20,000 shares/day. Anyone involved with this stock needs to be aware of this fact.
The Technicals
HURC has completed (during the 4th week of July) a bullish crossover of the 89 day moving linear regression line of the closes over the 89 day moving avg. of the highs. I use this type of crossover as an early buy signal that needs other technical verification. I usually use intermediate term stochastics and relative strength buy signals as verification. In this case the 89, 3, 5 stochastics verify with a positive crossover of the %K over the %D occurring above the bullish threshold value of 80. The 55 day RSI has broken out of a downtrend measured from the beginning of the inverted head and shoulders pattern. The 55 day RSI is approaching but has yet to achieve a breakout of the larger downtrend measured from the beginning of the symettrical triangle. When the chart pattern is broken out of I would expect the technical pattern to break out as well.
The commodity channel index for all periods at least up to 377 days is above +100 and rising. This is bullish.
The Bollinger Bands support the general uptrend of the stock. The 21 day BB's are tightened up suggesting that a price move is imminent. The 3 day BB's have just seperated from each other on 8/5 suggesting that a move may currently be under way.
The entire range of moving averages are just beginning to separate after being compacted in a 1/16 range at the end of June with the 50 day MA above the 200 day MA. The shorter MA's are all currently at 6 and any move up in the stock will put the entire range in proper bullish alignment. The MACD is above the bullish threshold value and rising.
Moneyflow has been in a very slow uptrend going back to 1990. It is currently beginning to move up from support. This gives it considerable room to increase.
The RSI across all values is above the bullish threshold of 50 and moving up.
The long-term stochastics momentum indicators have made consistently higher lows for 6 years and are now moving into levels that, for HURC, are historically bullish. The short-term SMI periods have also set up very nice uptrending support for the intermediate and long term periods. This indicator is now very bullish.
The technical profile of HURC indicates that a quite significant intermediate term move is approaching. This could lead to a long-term rally in the stock and is likely to be initiated with one or two substantial short-term runs.
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The preceding opinions are those of the authors and are not intended as an endorsement to buy or sell the security discussed.
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