Not All 3-D Printers Are Making It Big
Austin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The 3-D printing market has been hot recently. Three big companies posted earnings in the last few weeks which caused a rally in their stock prices. It can be hard to look past the hype and understand what the earnings really mean for these companies and which ones are worth your investment. Let's have a look.
A company that acquires
Stratasys (NASDAQ: SSYS) is a leading 3-D printing company that posted its earnings for the first quarter of this year last week. The earnings were very strong. Earnings per share grew by 34% from the same time last year. Total revenue grew by nearly 120%, totaling $98 million.
Some of this growth is due to recent acquisitions. The company is expanding its foothold in the 3-D printing market. Net income may have been higher had it not been for the increase in costs due to acquisitions.
The company has grown its bottom and top line more or less at the rate Wall Street was expecting. This news isn’t overwhelmingly positive or negative for investors. The company is on track to hit earnings per share of $1.91 this year. This would be a 28% increase from last year. Investors who own this company should hold on to the stock for now and watch as the market grows.
A stock with a lot of recent growth
3D Systems (NYSE: DDD) posted its earnings for the first quarter at the end of April. The company posted a strong growth of 24% for earnings per share. Total net income for the company was roughly $5.8 million.
The stock is up 170% in the last year and up 37% in the last month. Sales have been growing and will likely grow in the future as the entire 3-D printing industry continues to expand.
The issue investors need to worry about with 3D Systems isn't whether or not to buy, but rather when to buy. After the recent rally, the stock has appreciated quite a bit. Many Wall Street analysts are putting a one-year price target of just $45 for the stock. If this is the case, just hold on to the stock for now.
The next two quarters will give investors the answer of growth. If the company can continue to grow at a higher rate than it has in the past, it could be a very strong buy.
A company with losses and growing expenses
ExOne (NASDAQ: XONE) hasn't been fairing as well as the other two major 3-D printing companies. The other two companies focus on 3-D printing with plastics while ExOne offers metal printing as well. This is a great diversity of products, but perhaps the market just doesn't want them at this point.
The company posted a loss of 20 cents per share for the first quarter. This was lower than expectations by a full 9 cents. ExOne says the main reason for the lower performance was lagging sales in Europe.
There is some good news in this earnings release. The company sold five commercial 3-D printers in the first quarter of 2013. They range from $100,000 to $1.4 million. In the first quarter of 2012, the company didn't sell any. For all of last year, the company sold just 13. So this year could still turn around.
Operating expenses will be on the rise as ExOne continues to scale up to meeting global demand. The company has already seen a 110% increase in selling, general, and administrative expenses. This will likely grow throughout this year. This just isn't the best investment right now.
Even in a hot industry with lots of buzz, not every company is worthy of investors. Look beyond the smoke and see what the companies are really showing investors. In this case, stick with Stratasys or 3D Systems. Hold on to these stocks if you already own them or put them on your watch list to keep an eye on.
3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.
Austin Higgins has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!