Shares of 3D printing company Stratasys (NASDAQ:SSYS) rose 12.2% in November, according to data from S&P Global Market Intelligence. They've since fallen 3% so far in December, through Thursday, driven by the decline in the broader market.
The bigger picture is that Stratasys stock is up 4% in 2018, falling short of the 41% gain by shares of rival 3D Systems, but slightly surpassing the S&P 500's 2.7% return.
We can attribute Stratasys stock's good performance last month to the company's release of third-quarter results on Nov. 1 that beat Wall Street's adjusted earnings' expectation. In the quarter, revenue increased nearly 4% year over year, GAAP loss per share narrowed significantly, and earnings per share (EPS) adjusted for one-time items rose 38% to $0.11, sailing by the $0.06 analysts had been projecting.
Mind you, with revenue growth of just 4% and continued losses from a GAAP standpoint, Stratasys' results weren't strong. However, they were enough to suggest to some investors that the company is making progress on its turnaround. The market reaction -- shares soared to a closing gain of 19.9% on the day the company released its results -- seemed somewhat overdone. Not surprisingly, perhaps, the stock gave back some of its Nov. 1 gain during the remainder of the month.
Indeed, Stratasys made good progress in the third quarter, but "a sustainable turnaround will depend upon the company being able to profitably grow revenue," as I wrote in my earnings article. More specifically, investors should be looking for year-over-year revenue growth from sales of 3D printers -- this metric was flat last quarter -- because these sales drive sales of the high-profit-margin print materials.