Investors Shrug Off A Soft Quarter From Yaskawa Electric

About: YASKAWA Electric Corporation (YASKY), Includes: ABB
by: Stephen Simpson, CFA
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Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Investors seem more encouraged by the recovery in servo orders than troubled by the weak orders for robotics and severe decremental margins as Yaskawa approaches the end of the down-cycle.

Despite improving servo orders, end-market conditions still look pretty weak, with soft overall demand in autos, appliances, and general industrial.

Yaskawa shares already seem to price in a strong recovery/expansion cycle.

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