Shares of voxeljet AG (NYSE:VJET) -- which are up more than 200% since its IPO in October -- have launched straight into the stratosphere. The company is now the third-largest publicly traded 3-D printing company. Its shares have continued to rally since its earnings last week, which Wall Street found impressive. So just what is Wall Street thinking and are investors set for a rude awakening?
Focusing on quarterly results can be troubling
The company put up some impressive results for the third quarter, with revenue up 77% year over year and profits up 111%. Investors, however, should be careful when looking at quarterly reports from small, cyclical companies like voxeljet AG. It's far better to look at longer time periods: For the trailing nine months, revenues were up 21%, driven by a 53% increase in printer sales and flat service revenue.
At the time of this writing, voxeljet traded at a 65 price-to-sales multiples, which means investors are paying $65 for every $1 in sales. Is this a high ratio, and how does it compare to voxeljet's main competitor ExOne (NASDAQ:XONE)?
As you can see in the above chart, it's more than three times as expensive on a price-to-sales basis and growing at a slower rate than ExOne. This implies Wall Street is extremely optimistic about growth rates increasing at voxeljet, and the fate of investors relies on the company posting incredible results in the future.
A more thorough explanation
In the video below, Motley Fool analyst Blake Bos dives into voxeljet's earnings, compares them to ExOne, and gives his take on just how expensive this company is to buy today.
Blake Bos has no position in any stocks mentioned. The Motley Fool recommends and owns shares of ExOne. 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.