Now that the two leading diversified 3D printing companies, 3D Systems (DDD 0.25%) and Stratasys (SSYS 0.12%), have reported fourth-quarter and full-year 2017 earnings (3D Systems here and Stratasys here), we can directly compare their 2017 results.
Keep in mind that qualitative factors can be just as meaningful as quantitative ones, and future results are more important than current ones. Even with these caveats, the findings from this metric face-off should be helpful for making investing decisions in this space.
Image source: Getty Images.
Revenue
|
Company |
2017 Result |
|---|---|
|
3D Systems |
2.1% year-over-year increase to $646.1 million |
|
Stratasys |
0.6% decline to $668.4 million |
Data sources: 2017 earnings reports.
Advantage: Tie
At first glance, 3D Systems would appear to be the victor here. However, its revenue got a boost from its acquisition of the Vertex Global dental material brands in the first quarter of 2017. The company hasn't provided exact sales figures for Vertex, but did give a ballpark idea of its sales at the time of purchase. Based on that data, it's probably safe to say that 3D Systems' 2017 organic revenue growth hovered around flat with the prior year.
Both companies have struggled to grow revenue since 2015. The initial reason was likely that there was overcapacity in the field due to the large volume of 3D printers sold in the prior couple of years. Increasing competition has also been a factor since at least 2016, when compelling new rivals HP Inc. and venture-backed Carbon entered the market via launches of speedy polymer 3D printers for the enterprise market.
GAAP earnings per share
|
Company |
2017 Result |
|---|---|
|
3D Systems |
($0.59), down from 2016's ($0.35) |
|
Stratasys |
($0.75), up from ($1.48) |
Data sources: 2017 earnings reports. GAAP = generally accepted accounting principles.
Advantage: Stratasys
We can't draw conclusions by directly comparing EPS results because the companies don't have the same number of shares outstanding. Both companies are unprofitable from a GAAP standpoint, so neither is doing well. That said, Stratasys gets this category in its column because its GAAP earnings improved in 2017, whereas 3D Systems' got worse. 3D Systems' earnings were hit hard in the third quarter, driven by a $12.9 million legacy products and parts inventory writedown, as well as execution issues in the Americas and Asia-Pacific regions, and pricing pressure in some businesses.
Non-GAAP or adjusted EPS
|
Company |
2016 Result |
|---|---|
|
3D Systems |
$(0.02), down from 2016's $0.46 |
|
Stratasys |
$0.45, up 61% from $0.28 |
Data sources: 2017 earnings reports.
Advantage: Stratasys
The same comment as above applies to directly comparing the companies' adjusted EPS results. Relative to 2016's results, however, Stratasys is the decisive winner, as its adjusted EPS increased considerably in 2017, whereas 3D Systems' non-GAAP results flipped from a gain to a loss.
Image source: Stratasys.
GAAP gross profit margin
|
Company |
2017 Result |
|---|---|
|
3D Systems |
47.2%, down from 48.9% |
|
Stratasys |
48.3%, up from 47.2% |
Data sources: 2017 earnings reports.
Advantage: Stratasys
A higher gross margin relative to a company in the same line of business can be indicative of better operating efficiency and/or stronger pricing power.
Liquidity -- net cash on hand and operating cash flow
|
Company |
2017 Result |
|---|---|
|
3D Systems |
It had $136.3 million in cash and no long-term debt at the end of 2017. Generated $25.9 million in cash from operations during the year. |
|
Stratasys |
It had $328.8 million in cash and no long-term debt at the end of 2017. Generated $61.9 million in cash from operations during the year. |
Data sources: 2017 earnings reports.
Advantage: Stratasys
Both companies are in good shape from a liquidity standpoint. Stratasys, however, is the decisive winner here as it has a considerably bigger cash hoard and also generated more than twice the cash from operations as 3D Systems did.
Research and development spending
|
Company |
2017 Result |
|---|---|
|
3D Systems |
14.6% of revenue |
|
Stratasys |
14.4% of revenue |
Data sources: 2017 earnings reports.
Advantage: Tie
Both companies spent about the same respectable percentage of their revenue on research and development. Investing in research and development is critical in rapidly evolving technology spaces.
2017 guidance
|
Company |
2017 Guidance |
Projected Year-Over-Year Changes |
|---|---|---|
|
3D Systems |
Did not provide. |
N/A |
|
Stratasys |
Revenue of $670 million-$700 million, adjusted EPS of $0.30-$0.50, and a GAAP loss per share of $0.75 to $0.46. |
Revenue: Approximately flat to 4.7%; adjusted EPS: (33%) to 11%; GAAP EPS: flat to loss narrowing by $0.29. |
Data sources: Q4 2017 earnings reports and conference calls.
Advantage: N/A
We can't determine a winner here, since 3D Systems didn't provide a 2018 outlook. When it released its third-quarter results, the company withdrew its previously issued full-year 2017 guidance, citing the unpredictability surrounding legacy product quality and reliability issues. These issues have proved deeper than the relatively new management team (the CEO and CFO both came on board in 2016) initially realized.
Stratasys' EPS guidance was lower than the $0.61 that Wall Street was looking for. Management explained on the earnings call that beginning in 2018, the company is ramping up investments aimed at driving long-term growth.
The winner is...
Final score: Stratasys: 4; 3D Systems: 0; tie or N/A: 3.
Keep in mind the caveats listed in the opening: Qualitative factors can be at least as important as quantitative ones and future results are more important than current ones. Moreover, we didn't look at stock valuations.
