Fanuc (pronounced Fan-ook) (TSE:6954, Financial)(FANUY, Financial)(FANUF, Financial) is a Japanese manufacturer of robotics and the systems used in manufacturing. The company is the No. 1 robotics maker in the world.
The stock trades for 22,065 Japanese yen ($193.79), and the market cap is 4.5 trillion yen. The dividend is 394 yen, and the dividend yield is 1.78%. The Financial Times lists earnings as 643.44 yen and the price-earnings (P/E) ratio as 34.3.
Sales grew from 446 billion yen in 2011 to 623 billion yen in 2016. Over the last four quarters, sales were 526 billion yen. Sales dropped from 2015’s 730 billion yen.
The balance sheet shows 777 billion yen in cash and 97 billion yen in receivables. The liabilities side shows only 36 billion yen in payables and no debt. Wow! That’s impressive. Cash flow from operations was 140.6 billion yen and capex 1 trillion yen.
Fanuc manufactures robotic arms, lasers, robodrills, lathes, injection-molding machines, cutting machines and the computers to use these products and make sure they work in concert. It’s amazing. A robotic arm moves a hunk of metal that is machined into a high precision part. Fanuc is No. 1 in servomotors. These are spinning motors that are used in all parts of manufacturing. The computer programs to make these systems jive are amazing.
An excellent article on Fanuc and robotics was published last weekend in Barron’s. The article notes that Fanuc is far and away the leader in U.S. robotics. It notes that President Donald Trump wants to focus on American manufacturing. Fanuc’s vice president of U.S. operations states that robots will help bring jobs back to the U.S. The Robotic Industries Association offers a statistic that companies can often recoup installation expenses in two years. When asked if it would cost Americans jobs, Trump replied that we should build robots in the U.S. He’s right, but we have a long way to go. I wrote an article on GuruFocus last year recommending that investors wait before buying shares. Since the article, the shares have risen.
In January, Fanuc gave 2017 guidance of 133 billion yen. This is less than the previous year, but 9.2 billion yen better than expected. The increase is due to a resurgent China. The company is building a new robotics factory and hiring more engineers. NVIDIA (NVDA, Financial) and Fanuc are using artificial intelligence to operate robots. NVIDIAÂ is the world’s largest maker of graphic chips for the gaming industry.
Lathes and drill presses have been around for thousands of years. I watched a brass candlestick holder being made at the Henry Ford Museum in Dearborn, Michigan, using technology from the 1700s. It traced another candlestick and used a lathe to spin the cylinder of brass. Fanuc has the capabilities do to this at lightning speed. A human can’t keep up.
There’s no doubt that Fanuc is the best in robotics and that the trend will probably continue. As for the stock, I’m leery of buying something that is so expensive. Fanuc is an awesome company. No doubt. If you do want to be in robotics, Fanuc is the way to go. It’s usually a good idea to buy the best in an industry as it will continue to be No. 1.
Disclosure: We do not own shares.
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