Stratasys (SSYS, Financial) posted better-than-expected results for the second quarter. The company saw tremendous improvement in its organic revenue. Stratasys also posted impressive numbers due to sales of MakerBot products and services. The company is pleased to see such robust growth; in fact, the management claims it to be the best quarter in 10 years.
The solid results also attracted investors, leading its stock to rise by a good 18% right after Stratasys announced its results. Stratasys is expecting this momentum to continue, and posted an upbeat guidance for the future. Let us have a look at the underlying business of Stratasys.
Analysis of results
Stratasys’ revenue doubled in the second quarter. Its net revenue soared by a good 68% to $178.5 million. The company’s services business is also doing well and contributed about 14% to the net revenue. On the earnings front, the company posted EPS of $0.55 which beat the consensus estimates of $0.45 per share.
With the 3D printing industry improving, companies such as Stratasys are on a roller coaster ride. The company’s operational excellence is evident of the robust performance in the last quarter. Stratasys gained considerable market share. Sales are growing and it is seeing strong sales momentum for higher performance systems and materials depicting solid opportunities in the organic segment.
This is noticeable by the solid 35% organic revenue growth in the past. Stratasys is engaged in positioning itself for long-term growth. It is making several improvements in its organizational structure and also making significant investments in channel and product development.
Strategic moves
Stratasys has undertaken several strategic moves to be profitable in the future. The company is seeing the growing opportunities. To achieve these, Stratasys is investing in the projects that support its core strategic imperative such as leadership in prototyping. It is focusing on strengthening its product portfolio and expanding to direct digital manufacturing. It is introducing new niche vertical applications. With this new offering, Stratasys is confident of the acceleration of the new solutions in to the markets. Moreover, the main focus of the company will be on improvement in the 3D printing accessibility and improvements in customer intimacy.
Stratasys is pleased with the acquisitions that it made in the past, such as Solid Concept and Harvest Technology. Stratasys is further focusing on acquiring some more companies to strengthen its existence. Moreover, after a market analysis it has been revealed that after the Solid Concept and Harvest Technologies acquisition, Stratasys will have an opportunity for selling systems and services across the broad customer base.
Stratasys is seeing growing opportunities in manufacturing due to the growing demands of high-end systems. This will help Stratasys to strengthen its leadership in direct digital manufacturing. In addition, Stratasys is seeing positive feedback for its new Objet500 Connex3 Color Multi-material 3D Printer. The printer has many unique features such as ability to combine color and multi-materials in a single build. This enables it to produce fully functional parts that are closer to the final product than any other technology.
Product design and direct digital manufacturing are two additional areas which are expected to be the primary growth drivers for Stratasys in the future. In addition, it is also seeing lot of opportunities in the dental market where it thinks that it can address multiple applications. To support this effort, Stratasys has recently announced the establishment of the Stratasys Dental Advisory Board to help advance digital dentistry.
Stratasys has introduced two new 3D printers for the dental lab community which allows dental laboratories to produce wax-ups for crowns, bridges and denture frameworks. With these new additions, Stratasys now offers six systems for dental market. Stratasys is seeing healthy product mix trend with MakerBot and Idea Series systems.
Recently, Stratasys has successfully created MakerBot Europe. This happened as a result of the successful acquisition of its German-based MakerBot partner, HAFNER’S BURO. The company is also investing aggressively in product and channel development. It is also focusing on providing the necessary tools to fully leverage its new products and services into the marketplace. Also, the management continues to position the company for future growth through enhancing its organizational structure through strategic investments in channel, product, technology development, as well as M&A strategies.
Conclusion
Looking at the fundamentals, the company presently doesn’t have a trailing P/E as it is still incurring losses, but the forward P/E of 38.89 indicates handsome growth in the earnings in future. Its earnings for the five years are growing by a CAGR of 20% which shows that it has strong long-term prospects. So considering all such facts, Stratasys can be a good pick.
