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Seven Gurus Hold Small Cap FARO, Laser Technology

September 10, 2013 | About:
Sally Jones

Sally Jones

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The GuruFocus Value Screener for Sector Picks helps unearth possible small cap gems from a mountain of trading obscurity. Today’s find is FARO Technologies Inc. (FARO), which just announced the release of a new breakthrough piece of equipment called the FARO Edge ScanArm ES. The new arm-like tool is a performance booster used in various stages of product development, inspection, and quality control. It offers capabilities such as point cloud comparison with CAD, rapid prototyping, reverse engineering and 3D modeling.

While the high-tech world of laser scanning is typically best understood by engineers who design and build industrial equipment and parts, or other professionals who need hair-splitting precision measurements, seven billionaire gurus hold FARO Technologies, a globally-reaching small cap company that continues to revolutionize the manufacturing world with speed, precision, and portable user-friendliness.

Here’s a look at the company’s current financials and the billionaires holding FARO.

FARO Technologies Inc. (FARO)

Down 2% over 12 months, Faro Technologies Inc. has a market cap of $684.4 million; its shares were traded at around $40.14 with a P/E ratio of 34.70.

Founded in 1982, Faro Technologies Inc. is a global company that designs, manufactures and markets portable, software driven, 3-D measurement and imaging systems used in a range of applications for metrology, including manufacturing, industrial, building construction and forensics.

At the end of July FARO Technologies Inc. reported financial results for the second quarter ended June 29, 2013 with sales for the quarter increased to $68.3 million, from $66.8 million in the second quarter of 2012. The company reported net income of $3.6 million, or $0.21 per share, in the second quarter of 2013, compared to $4.7 million, or $0.28 per share, in the second quarter of 2012. FARO also saw new order bookings for the second quarter of 2013 of $66.7 million, a decrease of 6.1% from $71.0 million in the second quarter of 2012.

In a company press release, Jay Freeland, FARO's president and CEO, commented: “Our results in the second quarter were impacted by ongoing economic softness in Europe and Asia. While interest in FARO products remains strong, many customers have deferred purchase decisions in light of economic uncertainty. The Americas region continues to show signs of strength, generating double-digit sales growth in the quarter and our product development pipeline remains robust. To capitalize on anticipated improvement in our markets, we added staff to our sales and research and development organizations, which adversely impacted our second quarter results but positions the Company well looking forward. We expect the second half of 2013 should provide an opportunity for improvement driven by the global increase in new sales account managers. However, if the overall macroeconomic environment remains stagnant for the rest of 2013, our markets may remain under some pressure.”

Guru Action: Seven gurus hold FARO as of June 30, 2013 and there is insider activity.

As of June 30, 2013, PRIMECAP Management is the largest Guru stakeholder with 7.06% of shares outstanding, or 1,208,083 shares. PRIMECAP increased its position by 45.1% in that quarter, buying 375,500 shares at an average price of $36.47 per share, for a gain of 9.3%

Over a five-year history, PRIMECAP has averaged a gain of 17% on 1,069,483 shares bought at an average price of $34.10, as of June 30, 2013. On shares sold, the firm has averaged a loss of 24% on 11,400 shares sold at an average price of $52.48.

As of July 31, 2013, Chuck Royce reduced his position by 20.04%. He now holds 3.66% of shares outstanding or 626,963 shares. His previous trade, as of June 30, 2013, unloaded 587,550 shares at an average price of $36.47 for a gain of 9.3%.

Over a five-year history, Royce has averaged a gain of 27% on 2,161,687 shares bought at an average price of $31.28, as of June 30, 2013. On shares sold, he has averaged a gain of 11% on 2,040,094 shares sold at an average price of $35.81.

Read more about Chuck Royce’s recent small cap reductions.

Tracking changes in share pricing, revenue and net income:

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Use the GuruFocus Value Screen to find 52-Week Lows and discover potentially deep value stocks held by billionaire investors.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.7/5 (3 votes)

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