One industry that many investors are growing increasingly aware of is 3-D Printing. This high growth segment of the manufacturing and technology world has become a popular destination for those seeking to get in on the ground floor of a sector that many believe could have a very important role in the future.
From a stock perspective though, returns have been extremely rocky for most companies, despite this long term potential. Stocks in the 3-D printing space saw great gains in 2013 for the most part, though many have floundered this year.
A great example of this trend is one of the market leaders, Stratasys (NASDAQ:SSYS). This company saw gains of over 50% in 2013, but so far this year, the stock is down over 13%, easily underperforming the market YTD.
However, SSYS in particular could be an interesting buy at this subdued 2014 price, thanks in part to the long term outlook, but also due to recent earnings estimate revisions which suggest that a turnaround could be at hand, and that now might be a great time to pick up shares in this company.
SSYS in focus
First though, let’s briefly highlight what sets SSYS apart from the rest of the names in the 3-D printing world, and why this company might be the one to choose in the space:
Stratasys is a market leader in 3-D printing, and it actually has the biggest market share, by installed base, in the industry. This market share lead is largely thanks to its large position in the "home" market of the industry, due to its MakerBot division which specializes in this type of 3-D printing.
However, SSYS isn’t only focused on the home, as the company has industrial/high-end professional geared printers as well. And with recent expansion in and a larger focus on international markets, there is plenty of reason to believe that SSYS can continue to grow at an impressive clip and keep its title as one of the most well-rounded (and profitable) 3-D Printing companies out there.
This profitability and strong market position are best exemplified by SSYS’ most recent earnings report. In the release, Stratasys easily crushed estimates, posting EPS of 46 cents a share compared to estimates of 32 cents a share.
While this does mark the first beat for SSYS in the past four quarters, the real focus should be on analysts’ perceptions of the stock now. It appears as though many really liked SSYS’ plan for the near term, and have thus been raising their estimates for the 3-D printing stock’s earnings as of late.
While recent changes to earnings estimates have been flat for this quarter, we are seeing some big changes for both this full year and next full year. In both of these periods, analysts have made big revisions to the upside while not a single estimate has moved lower for either of these full year time periods.
The magnitude of these revisions has been pretty solid too, as the current year consensus has moved from $1.75/share 30 days ago, to $1.87/share today. Meanwhile, for next year, the consensus estimate has gone from $2.58/share in EPS to a level of $2.79/share right now. Plus, both of these earnings figures represent growth rates in excess of 48% (when compared to the prior year), suggesting strong earnings growth is projected well into the future.
For these reasons, we currently have SSYS as a Zacks Rank #1 (Strong Buy) and are looking for outperformance from this company in the near future.
SSYS is in a very strong industry, and in fact, its Zacks Industry Rank puts it in the top 7% of all industries we cover. And given the strong growth prospects of the 3-D printing industry and SSYS' enviable position in the space, we could see gains out of this company to close out the year.
So if you are looking for a company that is looking great from an earnings perspective, is in a high growth industry and is one of the few that isn’t at a 52-week high right now, consider SSYS. The company may still have plenty of room to run, and looks poised to make fresh highs to close out the year, should this quickly growing company see recent trends continue.
- STRATASYS LTD: Free Stock Analysis Report (email registration required)