Proto Labs dives; SA contributor questions valuation, growth

SA contributor Keubiko questions Proto Labs' (PRLB -11.1%) credentials as a 3D printing play - the company makes custom parts for industrial customers using machining/injection molding tools - and suggests the fact it has been classified as such "reminds [him] a bit of the 1997-2000 period where any company that put an "e" in front of its name got an instant spike in share price."

He also takes aim at Proto Labs' valuation (11x 2013E sales), and thinks the company needs to add nearly 6K unique product developers per year (rather than the 1.4K it has been adding) to justify its current multiples.

The author also notes Proto Labs' U.S. sales (over 70% of revenue) only grew 1.5% Q/Q in Q3, and that departing CEO Brad Cleveland has sold $78M worth of shares since the company's 2012 IPO.

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Comments (4)
  • polski1948
    , contributor
    Comments (3) | Send Message
    These 3d printer parts have to be cured in a big a kiln for how long, for how big a part? protolab uses real metal billets that are a lot cheaper than kilns.
    22 Nov 2013, 02:05 PM Reply Like
  • Doug Miller
    , contributor
    Comments (91) | Send Message
    Since 99.99% of Cleveland's total net worth is likely tied up in PRLB stock, it seems perfectly reasonable that he would want to sell off a good portion while it is richly valued in order to diversify his holdings. Would Keubiko hold his entire net worth in a single company? I don't think anyone would argue that the stock is cheap right now. However, there is a difference between richly valued and ridiculously over valued. (I hold a small position in PRLB. I believe the company has a promising long term future. I also believe the stock price will be quite volatile for a few years)
    22 Nov 2013, 02:16 PM Reply Like
  • Keubiko
    , contributor
    Comments (3015) | Send Message
    I would not hold my entire net worth in a company, but I wouldn't quit either.
    22 Nov 2013, 02:47 PM Reply Like
  • Doug Miller
    , contributor
    Comments (91) | Send Message
    There is definitely some mystery as to why he is deciding to leave. I kind of doubt it is because he believes the ship is going to suddenly sink. I know that he has missed a number of company events and even conference calls lately due to illness (according to the company, at least). I am hoping his departure is not related to that (some sort of serious illness that he wants to keep private). Another possibilty is that he's just plain gotten bored, and has no financial pressure to keep plugging away. He has also expressed a desire to spend his energy on some sort of do gooder activities. Lot's of folks thrive on a challenge ... and once that is gone they get restless. Summing up, there's lots of reasons he might be leaving.
    22 Nov 2013, 05:21 PM Reply Like
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