Zacks' Bear Of The Day: ExOne Company

Jun.30.14 | About: ExOne (XONE)

3-D printing is a very exciting industry that is poised to drastically alter the manufacturing landscape. The technology allows for the making of three dimensional objects from a digital model or program, and it is catching-on across the country.

Publicly traded companies have started to proliferate in the space, though so far they have seen mixed success from a share price performance perspective. One stock that really embodies the volatility in this space is undoubtedly the ExOne Company (NASDAQ:XONE), a security that has taken investors on a roller coaster ride over the past 52 weeks.

XONE in Focus

ExOne is a company that manufactures and sells three dimensional printing machines and printing products in three key regions; Americas, Europe, and Asia. This Pennsylvania-based company hasn’t been publically traded for too long, but it has seen extreme volatility in its share price lately.

While it is up significantly since its debut, the stock has seen heavy selling pressure so far in 2014, including a nearly 40% loss YTD. However, XONE has been turning things around in the past month as the stock is now up over 30% in that shorter time frame.

Yet before investors get their hopes up about this stock and a potential turnaround in its shares, a closer look at recent earnings estimate revisions for XONE is warranted. Analysts have been ratcheting down their expectations for the company’s near term outlook, and this may suggest that a reversal could be at hand in this stock before too long.

XONE Estimates

Analyst expectations for both the current quarter and the current year have been falling over the past two months, and by a pretty wide margin too. The consensus estimate for XONE’s current quarter calls for a 15 cent per share loss, down from a consensus estimate of a five cent per share loss sixty days ago.

Meanwhile for the current year, estimates have also plunged over the past two months. The consensus estimate called for a loss of 18 cents a share two months ago, but today the estimate has fallen to a loss of 41 cents a share, representing a huge shift lower in a very short time frame.

If these plunging estimates weren’t enough, investors should also note that XONE has a horrendous track record when it comes to meeting expectations anyway. In fact, the company has missed estimates in three of the last four quarters including two triple digit percentage misses in a row.

With these estimates and a poor track record of meeting expectations anyway, investors shouldn’t be fooled by XONE’s recent run up. In fact, we currently have a Zacks Rank #5 (Strong Sell) assigned to this security, and thus are looking for a pull back after its recent huge move higher.

A better choice in the space?

If investors are hoping to stay in the 3-D printing industry, a look to 3D Systems (NYSE:DDD) could be an interesting play. The company currently has a Zacks Rank #3 (hold), while it is currently profitable unlike XONE.

Either way, look for the 3-D printing space to remain volatile in the near term, especially as the industry goes through growing pains. XONE may find its footing eventually, but given the sliding estimates and its poor track record, it may be a stock to avoid in the near term unless you are willing to take an extremely long term view on this stock.