Why ExOne Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, three-dimensional printer maker ExOne (NASDAQ: XONE  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at ExOne and see what CAPS investors are saying about the stock right now.

ExOne facts

Headquarters (Founded)

Irwin, Pa. (2005)

Market Cap

$347.9 million

Industry

Industrial machinery

Trailing-12-Month Revenue

$18.6 million

Management

Chairman/CEO Kent Rockwell
President/COO David Burns

Trailing-12-Month Operating Margin

(61.7%)

Cash/Debt

$3.5 million / $24.4 million

Competitors

3D Systems (NYSE: DDD  )
Stratasys
(NASDAQ: SSYS  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 22% of the 81 members who have rated ExOne believe the stock will underperform the S&P 500 going forward.

Just this past week, one of those Fools, All-Star 4Foolz, touched on the stock's seemingly unsustainable price run:

The stock just IPO'd and the 3D printing euphoria took it away! I think this is a great short here. ExOne is a small company based in PA that just went public, surely trying to ride the 3D printing craze. ... At the IPO price, they were selling at 10+ times sales. At the current price 80% higher, that number is at 20x sales. The company is not profitable. In fact, their losses keep growing year over year. ... Lots of red flags here. I am certain there will be a lot more equity dilution coming down the road at much lower prices.

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Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On February 18, 2013, at 10:40 AM, samirpatel0001 wrote:

    Understand that the company is small. I think they own a lot of the patents in the technology. I believe Exone owns the patents that allows them to print in 3D with metal. I can only see them making money if this is true. They also can do ceramic or hold the patents to that as well. They should grow with their own machines or royalties with their patents by other companies. TESLA trying out one of their machines? Anyone else with more information regarding this company?

  • Report this Comment On February 18, 2013, at 11:30 AM, stomp725 wrote:

    A stock broker I spoke to last year called DDD overvalued at $24 a share too... glad I didn't listen to this "conventional wisdom". 3D printing is going to change everyone's life; companies like this may not be profitable now because of the enormous R&D they're putting in ahead of the curve, but just you wait.

  • Report this Comment On February 19, 2013, at 7:37 AM, KCAlbak wrote:

    Stomp725 makes one point, but more important is what products are marketed and the revenues they produce. A single million dollar Exone machine marketed is equivalent to selling 715 3D "consumer-oriented" models. Much of what 3D sells are 'toys' for home and office use, much like the first personal computer being able to store "2000 recipes!".

    I found two firms that bought these plastic 3D printers. Neither was using them.

    Both said the raw materials cost 50X what normal plastic stock would cost, and reverted to simple machining of cheap plastic stock.

    More importantly, the real growth will be in metal alloy parts, something much more expensive to machine accurately or while producing metal waste. The only two public companies that can do this are Swedish Arcam (up 40% in two weeks, and holding), and ExOne.

    The second question arises around size. Large, metal-alloy, one-of-a-kind parts are hugely expensive to manufacture conventionally by skilled machinists working overtime for days on a single large part. The potential revenue for an alternative that is both cheaper and less wasteful is enormous.

    The one unaddressed fact is that operating these machine takes a fairly high skill level. Having a service department with these skills to operate their own equipment can be prohibitive. That means the service end of companies like Exone using their own equipment with a trained staff could mean the real profit is in making the parts for the customer, rather than just selling them the machine (and materials). This revenue source will equal or surpass sales of machines, at least in the next few years.

    From this revenue perspective, the real potential is not DDD and SSYS, but XONE, AMAVF, and those privately-held companies that are burgeoning right now. K. C. Albak

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