Voxeljet: Newly Public 3-D Printing Company Is the Real Deal

Despite all the media hype surrounding 3-D printing -- the technology allowing successive layers of material to be printed out on top of each other to create three-dimensional products -- there are surprisingly few ways for investors to enter the 3-D printing space. While a few major companies like GE are engaged in the 3-D printing industry, for most of the last decade there have been only two publicly traded companies focused solely on 3-D printing: 3D Systems (NYSE: DDD  ) and Stratasys (NASDAQ: SSYS  ) . Both companies have seen phenomenal stock runs over the past few years, and perhaps that has inspired the recent bout of initial public offerings from smaller 3-D printers. On Friday, voxeljet (NYSE: VJET  ) became the newest 3-D printer maker on American public exchanges, with its initial public offering raising $84.5 million in capital for a company now valued at about $552 million as of market close Monday. So what's this new 3-D printing company all about, and is it right for your portfolio?

About the business
Voxeljet's initial public offering follows the IPO of fellow 3-D printer ExOne (NASDAQ: XONE  ) in February, which has since gained nearly 100%. Voxeljet shares a lot in common with ExOne. Bigger, older peers 3D Systems and Stratasys have historically been focused primarily on the consumer market (though that may be changing), producing a range of of relatively low-cost printers that could be bought and used by individuals or small businesses. ExOne and voxeljet are both aimed more at industrial and commercial users in fields like automotive, aerospace and defense, and engineering, utilizing a smaller number of heavier-duty printers to create components that would be more at home in a factory than on a desk.

Voxeljet doesn't sell many printers, having an installed base of just 52 printers worldwide including test printers, compared to tens of thousands of units shipped by both 3D Systems and Stratasys. Instead, voxeljet sets itself apart with the size and speed of its printer, making the company's on-demand print services more attractive for heavy-duty uses. The company's largest printer has a maximum build size of more than three feet by six-and-a-half feet by 13 feet, a volume voxeljet claims is more than six times greater than the next-largest competitor. This allows voxeljet a significant advantage in output speed compared to its peers, which helps the company position itself toward industrial and big commercial clients with more intensive needs than a consumer-facing business.

voxeljet custom-printed 3-D model Aston Martin for use in the Bond film "Skyfall". Photo courtesy of voxeljet.

With any company doing business in an emerging field, technological superiority is an important marker of success. I would be loathe to invest in any 3-D printing company that didn't have its own intellectual property portfolio, but as of July 2013, voxeljet had over 130 patents or patents pending, including 20 patents issued and 13 patents pending in the U.S.

Many of its patents relate to printing with sand, a technique that allows voxeljet to create unique and customized molds with which to cast new metallic products. This technique has become popular with industrial designers looking to create rapid prototypes and equipment operators with unique component needs. Voxeljet developed this technique, and actually licensed patents related to printing with sand to competitor ExOne, which now owns the exclusive rights to make and sell machines that utilize the technology. As long as voxeljet remains primarily a print service provider, this isn't a problem, but if the company is interested in selling its own machines it may regret this decision.

About the stock
There's no doubting that voxeljet stock looked a lot more attractive on Friday than it did on Monday. The company issued 6.5 million shares at $13 each on Friday, and by the end of the day the stock had already doubled. By Monday, the stock had reached a dizzying high of $39.75, more than triple its IPO price. While voxeljet executives may be kicking themselves for leaving money on the table by pricing initial shares so low, investors today might want to be wary.

By any measure, voxeljet stock is expensive. The company hasn't earned a profit so far in 2013 due to the production cost of creating a new printer, but based on 2012 earnings of $276,000, or $0.03 American depository share, voxeljet stock is selling for more than 1,000 times earnings as of Wednesday's $30 stock price. In comparison, 3D Systems' price to earnings ratio is 90. Voxeljet brought in $11.3 million in sales in 2012, and despite a growing backlog, the company is expected to repeat that performance in 2013 due to capacity constraints -- raising capital to buy new production facilities was indeed part of the company's goal in going public. Nonetheless, $11.3 million in sales at the stock's current price would give a price to sales ratio of nearly 50, more than double ExOne's price to sales ratio and nearly quadruple that of Stratasys and 3D Systems. To put that in perspective, the average price to sales ratio of the S&P 500 is 1.5, implying that the market currently expects voxeljet to grow 33 times faster than the broader economy, a tall order for any business.

Foolish bottom line
Even for the high-flying 3-D printing industry, voxeljet's valuations are in some truly rarefied air. It's good to be cautious of new IPOs from small companies in a highly publicized industry. Even in a high-growth industry, not every company will make it. Personally, I wouldn't put any money into voxeljet that I wasn't prepared to lose. That being said, while the company may have been inspired to go public based on the hype around 3-D printing, this is far from a dotcom-era start-up with no business prospects banking on the buzz. Voxeljet has real cash flow, real clients, and perhaps most importantly, real and very valuable intellectual property. 3-D printing is forecast to grow by 20%-30% annually over the next few years, and voxeljet sees an even bigger market than that in its metal casting business. An investment in voxeljet is not for the faint of heart, nor for those who can't afford a loss. But for those looking to spread their bets in a high-growth industry, voxeljet is the real deal.

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Editor's note: A previous version of this article misstated the type and the amount of voxeljet's 2012 earnings per share. The Motley Fool regrets the error.


Read/Post Comments (10) | Recommend This Article (12)

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 October 22, 2013, at 6:19 PM, VitamanD wrote:

    the real deal? maybe. but for twice the price as xone i will take a pass.

  • Report this Comment On October 22, 2013, at 7:50 PM, dtrumeter wrote:

    Motley Fool said the same thing about XONE when they IPO'd. Now their newsletters recommend to buy XONE. I'm long VJET and will enjoy the ride way high.

  • Report this Comment On October 23, 2013, at 9:56 AM, GerdW wrote:

    Your calculations are wrong:

    "but based on 2012 earnings of $276,000, or $0.14 per share, voxeljet stock is selling for more than 250 times earnings as of Monday. "

    if you divide 276.000 US$ by 0.14$ you come upt with a calculation base of 1.9 Mio shares.

    As you stated above the number of issued shares is much higher ("The company issued 6.5 million shares at $13 each on Friday")

    That is because they issued ADSs on the NYSE.

    One ADS is worth 1/5th of an ordinary share.

    In your calculation you took the number of ordinary shares and the price of the ADSs.

    To come up with the right number, you have to devide the profit per share of 0.14$ by 5 or take the price per ADS times 5 to come up with the right calculation basis.

    With the right calculation you will face the fact, that VJET is trading at more than 1250 (!!!) times earnings as of Monday.

    Best regards

  • Report this Comment On October 23, 2013, at 11:55 AM, TMFCatoMinor wrote:

    Thanks GerdW, you're absolutely right. The prospectus breaks out 2012 earnings per ordinary share and earnings per ADS, and I looked at the wrong line item. I'll go ahead and update that.

  • Report this Comment On October 23, 2013, at 1:05 PM, hasf22 wrote:

    Even at the IPO price of $13 it would trade at 464 times earnings!!!

  • Report this Comment On October 23, 2013, at 2:13 PM, TMFCatoMinor wrote:

    Well, keep in mind that plenty of small, high-growth companies, including ExOne, don't have P/E ratios at all because they don't have earnings. voxeljet's $0.03 per share looks a lot better than ExOne's 2012 $1.16 loss per share, yet ExOne has been a terrific investment since its February IPO. Buying stock in companies like these isn't about earnings this year, or even earnings a few years from now, it's about the expectation that the company will develop over the next decade into a major profit generator. Some of these investments will fail, but a single winning bet can easily offset the losses.

  • Report this Comment On October 23, 2013, at 8:38 PM, GerdW wrote:

    @TMF

    I am not here to pick on you as everybody has its own opinion about investments and that is ok.

    But please take the following fact into your consideration.

    This is not a new startup:

    The company (as stated in the SEC files) is in the same field and activly promoting and selling their products since 1999.

    In the last three years they sold the total of 10(!!!) of their product and even in 2013 their goal is to sell 6 (six).

    The same number of printers they sold in 2012.

    In an ever increasing market over the last years that does not seem to be a pretty big demand by customers.

    Back in the Internetbubble Amazon was undervalued because they lost money (due to the costs) but they were selling products like crazy.

    Tesla is expensive and they lost a lot of money because of Research and development. But their cars sell and people like them.

    Voxeljet does not sell its products. They are not in pretty high demand (10 printers worldwide does not even count as "demand" for me)

    I a sorry to say for me that is the typical "jump on the running train" and make money while the trend is hot!

    Maybe I am wrong but price to earnings ratio of over 1000 for a company that does not sell its products ??? Are you kidding me?

    Best of luck and although I ramble, I like your article!!

  • Report this Comment On October 24, 2013, at 4:00 AM, TMFCatoMinor wrote:

    I don't think we're disagreeing, Gerd: I did say I wouldn't put money into the company I wasn't prepared to lose. Since I'm not in a position where I'm prepared to lose any money, I'm not investing. ;-)

    voxeljet does seem more focused on providing print services on-demand than actual printers, though. So far it's lacked capacity for major manufacturing expansion, maybe the IPO will change that one way or another. With both 3D Systems and Stratasys looking to expand into metal, and both having war chests in the mid six-figures range, I wouldn't be shocked if voxeljet turned into an acquisition candidate.

  • Report this Comment On October 24, 2013, at 4:01 AM, TMFCatoMinor wrote:

    And thanks for reading!

  • Report this Comment On November 04, 2013, at 8:56 AM, wolfgraf wrote:

    thanks for the update on the 3 d printer,

    so comments like 1000 time s forward earnings,

    and wha t was it when dell msft, apple have had their IPO and then collapst to 7 to 8 dollar each from god knows what,

    thne it was a loss of 2450 , but thye kept it because it was just a hick up .

    if the mahcine s can do wha t thye say it will have to find its nichee 's in the production of items tha t willgenerate a better return for the mfgr, and profit, so find that wha t one mya need with less labor abnd up front cost, like generate a mold , rather then pay 5000 to 50 000 dollar like u do now in china, that is anyway a joke, so let them invest then jay leno got the money or our 401 K plans also avl, right, chiao bella ,

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