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Arcam AB (OTCPK:AMAVF), the Swedish manufacturer of 3D Printers that create products using metals such as titanium aluminide, has issued a flurry of positive news over the past week. Last Friday, Arcam issued two press releases reporting the sale of three new systems. On Wednesday, it issued two press releases reporting the sale of two new systems. Today, it eported that Italian aerospace company Avio has ordered six new systems for delivery over the next three years.

Today's announcement also stated that it has received a total of 24 new machine orders in 2012 and it will be entering 2013 with a solid backlog of orders. Further, today's announcement confirmed what I had speculated is occurring in my last Seeking Alpha article about Arcam: that aerospace manufacturers are beginning to use Arcam 3D printers for volume production.

What does this mean for investors in Arcam? Obviously, it's good news, but how do we begin to quantify the growth that is being reported? In the chart below, I have outline three scenarios. The first, I consider very conservative; the second, most likely; and the third, modestly optimistic:

1st 9mos 2012 Unit Sales (Actual)

4Q 12 Unit Sales (Est.)

2013 Unit Sales (Est.)

2012 Earnings/ Share (Est.)

2013 Earnings/ Share (Est.)

Dec 2013
ttm p/e

Dec
2013
Stock Price

Conservative

7

7

25

$0.68

$1.21

20

$24.20

Middling

7

9

35

$0.80

$1.75

30

$52.50

Optimistic

7

11

45

$1.00

$2.50

40

$100.00

We know that during the first nine months of 2012, Arcam sold seven units. We know it entered the fourth quarter with a backlog of seven units and that it has received additional orders during the quarter; so, I am estimating that it will report the sale of between seven and 11 machines in the fourth quarter. For 2013, Arcam has reported it will enter the year with a "välfylld orderbok" (solid backlog) of new machine orders; my conservative scenario is that it will sell a total of 25 machines in 2013 and my optimistic scenario is that it will sell 45 machines. From these sales totals, I have tried to conservatively estimate earnings per share (Arcam's trailing 12 month eps was $0.50, which includes earnings from the sale of seven machines). Assuming in all three scenarios that 2013 is an exceptional growth year and that future growth rates will be more modest, I have assigned what I believe to be relatively low target p/e rates for December 2013, and calculated what the stock price would be.

Obviously, there is a lot of speculation and estimates in the above scenarios. There is also a great deal of risk. It is not clear that this company that had 49 employees on September 30, 2012, can handle the escalating number of orders while also continuing to improve the technology. Competitors such as German manufacturer EOS, which already has 3D printers on the market that will manufacture in metals, may introduce machines that are competitive with Arcam. Investors should make their own estimates and their own determinations as to whether or not this is a good investment.

We will have a better idea of what is the potential for this company after fourth-quarter earnings are released (no date for this has yet been reported). From my perspective, I continue to consider Arcam a strong buy at its recent price around $22.50.

Source: The Good News Keeps Coming For Arcam