|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Stratasys Certain to Keep the Growth Pattern in Future
Posted by: shash63 (IP Logged)
Date: May 3, 2014 01:11PM
The 3D printing industry is flying high and leading 3D printer manufacturers are reaping the benefit of this high flying market. The market for 3D printers is projected to grow by 500% in the next five years. Stratasys (SSYS) is one such company that is keeping its growth intact despite stringent competition from rivals like 3D Systems.
Strong Financial Growth
Stratasys has been doing better than one of its closest rivals, 3D Systems. The last quarterly results declared by the company exemplify that it has enhanced its gross margins and also beat analysts’ estimates on both revenue and earnings. The recently released Quarterly results of the company reveal the growing strength of Stratasys. The company recorded a voluptuous revenue growth of 61.6% from year ago quarter to record $155.5 million which also exceeded the consensus estimate of $150 million. The higher demand with cross selling activities enabled Stratasys to witness revenue.
Innovations That Make Stratasys a Leader in 3D Printing
Innovations and technology enhancement are keys to the success of any company. Stratasys, to stay ahead of its competitors, complies with this belief and has launched multi material 3D printers. Such printers will cut down the designing and prototyping time and also boost the performance in terms of speed of completion of job. 3D printer success in industrial printing revolved around the printing speed and since the speed of 3D printers is comparatively slow and was not easily acceptable in industries. But now with this multi-material technology, industries will certainly consider Stratasys for its various designing and prototyping work and it further widens up market potential for Stratasys.
Acquisitions Can Further Boost Revenue
Stratasys over the past had acquired various companies that enriched its product and service portfolio. Very recently, it announced that it will acquire Solid Concepts and Harvest Technologies, this acquisition will help 3D system to sell 3D printing to its customer directly and also broaden its cutomer base. Stratasys will acquire Solid concept for $295 million although the commercial value of Harvest technology deal is undisclosed as of now. The customer base of Solid concepts is spread across wide range of verticals, including medical, aerospace, and industrial, among others. Both these companies will be combined under RedEye which is an on-demand printing service targeting industrial users. Both these companies provide similar services as of RedEye. This now enables to be the largest 3D printing Services Company in North America. Solid concept had hit the headline last year as a company that generated revenue $65 million from 3D printing services. The annual revenue of Harvest Technologies is not known.
Another strategic acquisition of MakerBot also panned out nicely as it contributed over 16% to its revenue. The low cost of MakerBot's Digitizer has helped Stratasys to perform in the consumer segment and the company is looking to build up on its success. Stratasys recently announced the order availability for MakerBot's largest 3D printer called the MakerBot® Replicator® Z18 3D Printer. In addition, Stratasys will also start shipping for the new fifth generation MakerBot Replicator Desktop 3D Printer. MakerBot makes an important contribution to the top line of Stratysys and in recent quarter revenues contributed by Makerbot were $24.9 million.
Finally, with the first phase of the Stratasys-Objet merger integration completed, it is now focusing on aligning additional functional areas within the company, including R&D and operations.
The company has been recording strong growth oriented result as an outcome of Stratasys-Objet merger synergies and a rapidly expanding market for 3D printing and additive manufacturing solutions worldwide. Revenues grew by 62% comparable quarter last year to record $156 million in the fourth quarter. Major contribution of $24.9 million was MakerBot. Net profit increased by 59% to $25.8 million, or $0.50 per diluted share, from $16.3 million, or $0.40 per share, last year.
Valuation and Conclusion
The company maintains a healthy balance sheet with significant cash balance, combined with the availability of $253 million revolving credit facility, provides its flexibility to fund internal growth plans as well as future M&A projects and investments.
At a forward P/E ratio of 38, Moreover, over the next five years, earnings are expected to grow at a CAGR of around 20%, which makes Stratasys a more sensible buy to benefit from 3D printing's growth. So, investors looking to make the most of the 3D printing industry should definitely take a look at Stratasys for the long haul.
Stocks Discussed: SPY, DJI, QQQ,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.