Hardinge Inc a Better Buy at an 8 PE Than Stanley Black & Decker?

Introduction:

Hardinge Inc. (NASDAQ:HDNG) was founded in 1890 and is headquartered in Elmira, New York. The Company globally designs, manufactures, and distributes computer controlled metal cutting lathes, grinding and related tooling and accessories. The Company markets its products under the Super-Precision brand name in the United States, Europe, and Asia. It offers high-precision computer-numerically controlled cutting lathes, machining centers, grinding machines, collets, chucks, index fixtures, and other industrial products, as well as related accessories, including work holding, tool holding, and other industrial support products for companies making parts from hard to machine materials, and small and medium-sized independent job shops. It sells its products through distributors, agents, and manufacturers and representatives.

Stock Snapshot:

The stock for Hardinge Inc. (NASDAQ:HDNG) stood at USD 9.41, representing a total market capitalization of USD 110 million. Over the last year the stock has traded between a range of USD 7.61 and USD 11.65. The stock has witnessed an average volume of 29,897 shares over the last three months. The stock has been trading at a P/E ratio of 8.19, a P/S ratio of 0.32, and a P/B ratio of 0.71. The Company has 11.69 million shares outstanding, with a float of 11.34 million.

Competitor Analysis:

Stanley Black & Decker, Inc. (NYSE:SWK) provides power and hand tools, mechanical access solutions, and electronic security and monitoring systems primarily in the United States, Europe, Latin America, and Canada. The stock for Stanley Black & Decker, Inc. stood at USD 68.72, representing a total market capitalization of USD 11.63 billion. Over the last year the stock has traded between a range of USD 58.59 and USD 81.90. The stock has witnessed an average volume of 1,528,780 shares over the last three months. The stock has been trading at a P/E ratio of 20.77, a P/S ratio of 1.05, and a P/B ratio of 1.61. The Company has 168.78 million shares outstanding, with a float of 167.01 million.

The Timken Company develops, manufactures, markets, and sells anti-friction bearings and assemblies, alloy steels, and mechanical power transmission systems. The stock for Timken Company stood at USD 38.66 representing a total market capitalization of USD 3.71 billion. Over the last year the stock has traded between a range of USD 38.30 and USD 39.31. The stock has witnessed an average volume of 1,162,360 shares over the last three months. The stock has been trading at a P/E ratio of 7.18, a P/S ratio of 0.72, and a P/B ratio of 1.59. The Company has 95.85 million shares outstanding, with a float of 86.79 million.

Financial Analysis:

Sales:

For 9MFY12, the Company recorded total sales of USD 203.06 million, as compared to USD 303.3 million, registering a YoY decline of 24% approximately. Sales of machines accounted for approximately 77% of total sales for 9MFY12, whereas sales of non-machine products and services, primarily work holding, repair parts, and accessories, accounted for 23% of the total sales for 9MFY11.

Gross Profit:

For 9MFY12 the Company reported gross profit of USD 69.3 million, an increase of $1.3 million, or 2.0%, when compared the gross profit for 9MFY11. The increase in gross profit was primarily attributable to favorable pricing and product mix. Gross margin for 9MFY12 was 28.4%, as compared to gross profit margin of 27.1% for the corresponding period last year.

Net Profit:

For 9MFY12, the Company reported net income of USD 10.1 million, as compared to USD 8.7 million in the corresponding period last year, registering a YoY increase of 16%. The Company reported basic and diluted EPS of USD 0.87, as compared to USD 0.75 for the corresponding period last year.