SKFRY - SKF Leveraging The Short-Cycle Recovery But Short Cycle No Longer In Favor
- SKF reported eye-popping revenue and operating income growth for the second quarter, but that was largely as expected and most of the operating income beat was from an inventory build.
- Price leverage is looking a little disappointing and cost inflation is looking a little more fierce, which fits with my concerns for the industrial sector heading into the quarter.
- A broad multi-market recovery is underway and should support above-trend growth for at least two years, while past investments in localized, automated manufacturing drive margin leverage.
- SKF shares do look interestingly undervalued now, but I'm concerned about "fighting the tape" with a broader investor/sentiment shift away from shorter-cycle industrial names.
For further details see:
SKF Leveraging The Short-Cycle Recovery, But Short Cycle No Longer In Favor