NEW YORK (TheStreet) -- Hurco Companies
(HURC - Get Report) is a 46-year-old company working on a potentially disruptive product in 3D printing. On July 15, Hurco announced a filing of a U.S. patent application for an adapter, which turns CNC milling machines into 3D printers.
Three respectable 3d printing blogs are calling this adapter potentially disruptive technology.
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"We designed an additive manufacturing adapter that, in combination with proprietary Hurco control software, effectively turns a CNC milling machine into a 3D printer," said Gregory Volovic, President of Hurco Companies.
Hurco is an industrial technology company; it designs, manufactures and sells computerized machine tools for companies in the metal cutting industry worldwide.
The company is profitable, with 90 cents earnings per share in the first six months of this fiscal year. The average estimate for this year is $1.74 earnings per share. Hurco has beat estimates for the first two quarters this year. The balance sheet is strong, with $47 million in cash and $3.2 million in debt.Valuation: While it is not known what the revenue potential is for this new product, judging by industry comments above it sounds like it has potential to increase sales and earnings for an already profitable company. When we look at other 3d printing stocks: 3D Systems (DDD - Get Report) has a price/sales ratio of 10.4 and a 69 P/E ratio on current year forecasted earnings. Stratysys (SSYS - Get Report) has a price/sales ratio of 9.4 and a 47 P/E ratio on current year forecasted earnings. forecasted earnings of the legacy CNC business, which does not account for future 3D product sales. If I take the average price/sales ratio for DDD, SSYS and XONE, I get 11. If I take the average P/E ratio for DDD and SSYS, I get 58.
If Hurco had an 11 price/sales ratio on the $200 million trailing 12 months sales, that would be a stock price of $338.46. If Hurco had a 58 P/E ratio on the $1.74 forecasted legacy EPS, that would be a stock price of $100.92.Again, this comparison does not account for potential 3D sales from what industry publications are calling a potentially disruptive product.
HURC is definitely a stock to watch after the recent announcement of the 3D printing product and potential future announcements, as Hurco is also trying to expand this invention to include numerous other additive manufacturing processes.