2 Extremely Expensive 3-D Printers: Are They Worth It?

The industry of 3-D printing has been on fire over the past two years. That's thanks in large part to industry stalwarts Stratasys (NASDAQ: SSYS  ) and 3D Systems (NYSE: DDD  ) . Both companies have turned solid profits for years now while introducing revolutionary new technology to industrial and consumer markets alike.

The stocks of both companies have been on fire since January 2012, far outpacing the S&P 500's return of about 35%

DDD Total Return Price Chart

DDD Total Return Price data by YCharts

This has made the time ripe for smaller players in the 3-D printing field to go public. While investors are willing to pay a premium for companies that develop this technology, it makes financial sense to tap the markets for money to help grow business.

Today, I'm going to take a dive into two of the lesser-known, smaller players in the 3-D printing field: ExOne (NASDAQ: XONE  ) and Organovo (NYSEMKT: ONVO  )

Company

Specialty

Market Cap

Revenue

Profitable?

Price-to-sales

ExOne

Printing with non-plastic inputs

$800 M

$33.8 M

No

24

Organovo

Bio-printing

$480 M

$1.3 M

No

370

Source: Yahoo! Finance, SEC filings

ExOne
While it might seem hard for 3-D printing companies to find a niche when 3D Systems has been working to corner the consumer field and Stratasys has been aggressively courting industrial clients, ExOne has found a new twist: Offer a device that can print with a dizzying array of inputs.

Source: ExOne.

Currently, ExOne's printers can work with steel, ceramics, sand, glass, and bronze. And soon, ExOne's printers will also be able to produce objects with tungsten carbide, titanium, aluminum, and magnesium. That's an important technology to have, as it moves the idea of 3-D printing from just prototyping and mass-producing of plastic parts to more of a mass-manufacturing model.

ExOne's head start in this field is beginning to gain notice from the competition as well. Just this month, 3D Systems closed its acquisition of Phenix Systems, a company that specializes in printing metal and ceramic parts

At the same time, however, investors need to realize how small operations currently are, and how expensive the stock is. During the first quarter of 2013, ExOne sold only five 3-D printers for $4.2 million -- and during all of 2012, it sold just 13 printers. On one hand, these are extremely small numbers; on the other, it shows just how much room for growth there could be.

Equally important is that the company has generated only $33.8 million in revenue and no profit over the past year yet is valued at roughly $800 million. Short-sellers are well aware of this fact, as 34% of ExOne's float is currently sold short.

Organovo
If printing metal, sand, and glass parts sounds interesting, you'll be blown away by what Organovo hopes to accomplish. Currently, the company uses its Novogen MMX Bioprinter to create "functional human tissues that can be employed in drug discovery and development," according to a company filing.

Source: Organovo. 

But one day, the company hopes to be able to make "therapeutic implants for the treatment of damaged or degenerating tissues and organs." I'm not a medical expert, but this sounds like a best-case scenario if this company is eventually able to, for instance, make a brand-new liver for a patient waiting for a transplant.

With the kind of potential, you can understand why investors are excited. The stock currently trades for a monstrous 370 times revenue, and the stock is incredibly volatile.

Investors should also be aware that over the past 12 months, the company has generated only about $1.3 million in revenue. The average NFL player alone makes more money in a year than this entire company has ever made! And revenue from grants also makes up a large portion of that revenue.

What's a Fool to do?
If this is an industry that interests you, and you like the cutting edge take that Organovo and ExOne are taking, keep up the research. If you decide these are good investments, enter with eyes wide open, and be sure not to allocate more money than you're comfortable with toward the companies.

If you'd like a slightly more stable approach to the field, I suggest you check out "3 Stocks to Own for the New Industrial Revolution." Inside, you'll read up on three well-established, profitable companies that are dominating the 3-D printing field. Two of them are already mentioned in the piece, but one lesser-known player is also included. Just click here to learn more.


Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 20, 2013, at 1:08 PM, Rocketstocks wrote:

    Why are people always so eager to compare a startup company to its it current revenues? Its no surprise that a young company still developing their tech has very low revs.

    What people should be evaluating is the value and strength of their patents, their market position, partnerships and the management/talent they have to achieve their goals.

    ONVO has top talent that has helped build (at the executive level) several $100+ billion companies. They are the most advanced bioprinting company with the only working machine and their partners are some of the largest drug companies (Pfizer, etc) in the world, whom are paying them (with non exclusivity) to develop tissues for their specific purposes.

    ONVO's market cap of around $500 million is nothing compared to the growth and/or buyout potential from this game changing tech and imo the insiders are showing how serious they are by uplisting to a better exchange when they did.

    I see companies valued more than ONVO with just a fraction of the potential. I dont care if a company has $25 million in revs at THIS Stage, this is a drop in the bucket compared to the game changing potential. ONVO is possibly a key to longevity and what price do you put on the most desired goal of all mankind? Certainly more than $500 million

    By 2014 (which is just months away), ONVO expects to start generating sales revenues from Pfizer, which could easily be worth $10's of millions, but what matters most of all, is the other drug companies that will come calling ONVO shortly after they prove themselves via Pfizer. No company in this competitive sector can afford to be the last one to dramatically reduce their drug development costs, while increasing their testing efficacy. ONVO might have the next STANDARD in drug testing/development.

    We are nearing a major turning point for ONVO, they are closer now than ever. They delivered their samples to Pfizer in the 4th Quarter of 2012 and they have been testing them. ONVO expects Pfizer will be done testing in 6-12 months from their 4th Quarter 2012 deliver date, which is right about now.

    Pfizer expanding their contract with ONVO is worth more the market cap alone imo. Pfizer buys out companies with less potential for more than this market cap all the time. A successful outcome with these samples, could swiftly trigger a string of events that sends this stock flying.

    The other 3D print stocks compete with each other and there is no way to know which will come out as the leader long term, while ONVO is completely unique and has more high margin profit potential than all of the others combined.

    http://www.youtube.com/watch?feature=player_embedded&v=-...

  • Report this Comment On July 20, 2013, at 2:03 PM, SELLmtg wrote:

    ONVO is going to SELL shares to get $100ml.

    (I am not lying, read ONVO's SEC filing on 7/17/2013)

    GET out of ONVO now before it's too late.

    ONVO will sale shares again and again.

  • Report this Comment On July 20, 2013, at 4:20 PM, mw3051 wrote:

    i am old enough to remember when the motley fool ran stories that could help people with their finances.

    now motley fool runs advertisements for companies that pay them.

    *sigh* i miss the old times

  • Report this Comment On July 20, 2013, at 7:15 PM, Freud02 wrote:

    The good thing about 3D printing technology is that it will be less likely to be regulated and taxed

    by the Federal government than stem-cell technology.

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