What to Look for in Stratasys' Earnings

The quarterly jitters
Investors in Stratasys  (Nasdaq: SSYS  ) have seen shares climb 142% from a year ago while rival 3D Systems  (NYSE: DDD  ) has seen shares climb 162%. These large gains can cause what I like to call "the quarterly jitters." While quarterly reports are important for investors to check the pulse of whatever companies you may be invested in, they should not keep you up at night, either. That said, here's what investors should take note of.

Friday's earnings
Recently, 3D Systems surpassed earnings estimates by 14%, and as a result, shares have risen 15%. Shareholders watched shares of Stratasys also rally 10% after the news. With the company reporting earnings this Friday morning, those quarterly jitters are at their climax. Investors will see shares react based upon analyst estimates of $0.19 GAAP EPS and $0.37 normalized EPS, and revenue of $48.36 million. The street also expects full-year revenues to come in at $195.7 million, so watch the company's guidance for full-year results. Whatever the outcome, investors should take note of the valuation of the sector as a whole and how it relates to your own expectations and personal risk tolerance. 

Expectations
The 3-D printing segment has seen valuations soar over the past year to reflect P/E ratios north of 60 for the trailing-12-months' earnings. As you can see from the chart below, the two companies have very similar valuations with respect to price to sales, with Stratasys being valued slightly higher by the market. 

DDD Price / Sales Ratio TTM Chart

DDD Price / Sales Ratio TTM data by YCharts.

These valuations will only be supported by continued strong revenue growth over the coming quarters and years. If you're susceptible to those quarterly jitters, you may want to take caution when investing in these two highfliers. Investors should be aware that these two companies are long-term investments and the recent high-flying returns aren't indicative of near-term share performance. The Fool always recommends dollar-cost averaging, and this would be a great strategy when investing in either of these companies for the long term.

 

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Blake Bos has no positions in the stocks mentioned above. The Motley Fool owns shares of 3D Systems and has the following options: short NOV 2012 $35.00 calls on 3D Systems. Motley Fool newsletter services recommend 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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