3-D Printing Stocks: How Do They Stack Up by Valuation As 2014 Begins?

Valuation made a difference in this hot group's 2013 returns. Check out how their valuations now compare.

Jan 4, 2014 at 12:30PM

If you're following the 3-D printing stocks, you know this space was on fire in 2013. While all the pure-play 3-D printing stocks had a great year, Arcam's (NASDAQOTH:AMAVF) return of 427% trounced those of its peers, with 3D Systems (NYSE:DDD), Stratasys (NASDAQ:SSYS), and ExOne (NASDAQ:XONE) returning 161%, 68%, and 128%, respectively. (Voxeljet (NYSE:VJET), which went public in October, finished the year up 37% from its closing price on its IPO day.)

Arcam's extreme outperformance can largely be attributed to the huge valuation difference that existed between it and the other 3-D printing stocks at the beginning of 2013, in my opinion. First, we'll look at how their valuations mattered in 2013, and then their current valuations, which you might factor into your buying decisions in 2014.

Valuations matter -- especially relative valuations
Granted, absolute valuations for high-growth stocks, such as 3-D printing companies, might matter considerably less than valuations for slower growers. However, they matter quite a bit on a relative (to their peers) basis.

The price action of both Arcam and ExOne in 2013 provided support for the premise that relative valuations matter.

Sweden-based Arcam, which makes 3-D printers for the medical implant and aerospace markets, started the year with a price-to-sales ratio of about 4.5 and a price-to-earnings ratio of about 41. By contrast, the industry's two biggest players, 3D Systems and Stratasys, kicked off 2013 with price-to-sales ratios of about 8.3 and 9.0, respectively. (I'm comparing P/S ratios because Stratasys didn't -- and still doesn't -- have a P/E ratio because of its negative earnings on a GAAP basis.)

Of course, some stocks deserve to be more highly valued than their peers for reasons such as future growth prospects and earnings quality, among others. However, whatever differences that existed between Arcam and the two leading 3-D printing companies certainly didn't justify a 100% differential in P/S ratios. If anything, one would have expected Arcam to sport a higher valuation due to its smaller size, which makes growth on a percentage basis easier than it is for larger companies.

The reason Arcam was relatively cheap was that it was little known among U.S. investors at the start of the year, as it's a small foreign stock that trades over the counter in the U.S. However, once it was "discovered," investors dove in and drove the valuation up to fall roughly in line with its peers.

Meanwhile, investors in ExOne experienced the opposite force at work. They watched the stock zoom from its open near $24, when it went public amid great fanfare in February, to a peak in the low-$70s in late August, before it came crashing down to the low-$40s over the next month. While the stock has steadily recovered, it's still off its all-time high. Insider selling precipitated the correction; however, there's little doubt that the stock's relative over-valuation played a part. The correction left ExOne's valuation more in line with its peers.

How do the 3-D printing players stack up by current valuations?
Here's how the 3-D printers stack up by common valuation measures and a couple other key factors, as of Jan. 3.


Market Cap

Annual Revenue (Millions)




Operating Margin (TTM)

Profit Margin (TTM)

3D Systems








































Sources: Yahoo! Finance; voxeljet's third-quarter earnings report.
*For nine-month period through Sept. 30.

While 3D Systems and Stratasys started 2013 off with roughly the same P/S ratios (8.3 and 9.0, respectively), investors bid up 3D System's valuation relative to Stratasys' over the last year, so it's now 30% higher. This seems justified, as 3D Systems is currently profitable on a GAAP basis, while Stratasys is not. Additionally, investors viewed 3D Systems' purchase of Phenix Systems in June, which gave the company metals printing capabilities, and its teaming with Google for Project Ara, announced in November, very positively.

Stratasys has historically been profitable. However, its late 2012 merger with Objet negativity affected its profitability. Both the company and analysts expect a return to profitability in 2014.

Voxeljet's valuation is still sky-high. While the company does have some potential competitive advantages -- related to the size, speed, and configuration of its 3-D printers -- it's too soon to tell whether these advantages will be realized and justify its still extremely lofty valuation.

Voxeljet's P/S ratio is two and a half times that of ExOne's, which is its closest peer given their similar market caps, target markets, and business mixes. ExOne focuses solely on the industrial market, while voxeljet has both industrial and commercial printer offerings. Both companies' service center operations account for a considerable portion of their respective overall revenue.

Even if we went under the premise that voxeljet's future looks brighter than ExOne's -- and the other 3-D printing companies, for that matter -- it's hard to image a scenario that would justify its P/S ratio being so much higher than the others in the industry. While I know the stock was bid up on Thursday and Friday because of takeover rumors, it was still considerably more highly valued than its peers before the recent jump.

This doesn't mean voxeljet couldn't grow into its valuation. It does, however, mean that more extreme turbulence could lie ahead, especially if the company's next couple of quarterly earnings reports fall short of investors' expectations.

The Foolish bottom line
While it might not seem like valuations matter when we're in the midst of a go-go market, the party won't continue indefinitely with the same intensity. To position themselves for the best long-term growth, investors should consider relative (to a company's peers) valuations when making their investing decisions in the 3-D printing space. 

Growth stocks can be volatile; protect your savings with these stocks. 
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


More foolish insight

Fool contributor Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends and owns shares of 3D Systems, ExOne, and Stratasys and also has options on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information