Proto Labs (NYSE:PRLB), which provides quick-turn traditional manufacturing and 3D printing services, is slated to report its fourth-quarter and full-year 2018 results before the market open on Thursday, Feb. 7.

Proto Labs stock is up 3.3% for the one-year period through Jan. 22. That's a better performance than it might seem since the S&P 500 (including dividends) is down 5.2% over this period. Shares had been up considerably in 2018 but pulled back sharply during the market correction in the last three months of the year, along with many tech stocks and highly valued stocks, in general. The stock remains, however, a notable longer-term winner.

For some context -- though these aren't ideal comparables but the best we can probably do -- shares of the two largest pure-play 3D printing companies, 3D Systems and Stratasys, are up 6.4% and down 9.3%, respectively, over the last year.

A male operator standing next to a CNC metal-working machine.

Image source: Getty Images.

Key numbers

Here are Proto Labs' year-ago results, its fourth-quarter guidance, and Wall Street's estimates to use as benchmarks.

Metric

Q4 2017 Result

Proto Labs' Q4 2018 Guidance

Wall Street's Q4 2018 Consensus

Wall Street's Projected Year-Over-Year Change

Revenue

$94.18 million

$112 million to $117 million

$115.38 million

22.5%

Adjusted earnings per share (EPS)

$0.58

$0.77 to $0.83 

$0.80

37.9%

Data sources: Proto Labs and Yahoo! Finance.

The company's adjusted EPS guidance includes a negative impact of $0.02 to $0.03 for the projected cost of moving computer numerical control (CNC) metal-machining operations into a new facility in the fourth quarter, said CFO John Way on last quarter's earnings call. Proto Labs is approaching earnings on a strong note as its results have been robust throughout the year, with its earnings surpassing the Street's expectations in each of the first three quarters of the year. 

In the third quarter, the company's revenue grew 31%, EPS soared 57%, and EPS adjusted for one-time items jumped 54% year over year. In the second quarter, revenue, EPS, and adjusted EPS increased 34%, 49%, and 49%, respectively, year over year. And in the first quarter, these metrics grew 34%, 43%, and 39%, respectively, year over year. While we can attribute a sizable (but not exactly quantifiable) portion of the company's revenue growth over the last year to its acquisition of Rapid Manufacturing in Dec. 2017, its organic growth has also been quite robust.

Gross margin

Investors should focus on Proto Labs' gross margin, along with its top- and bottom-line results. The company's acquisition of Rapid has been exerting downward pressure on its overall gross margin throughout 2018.

This is a rather typical dynamic for companies soon after they make an acquisition, and is nothing to be concerned about at this point. Management is working on integrating Rapid into the fold, which should improve its efficiency and, hence, the company's overall gross margin. (Rapid added sheet-metal work to Proto Labs' service offerings and also expanded its CNC capabilities.)

Last quarter, Proto Labs' gross margin declined to 54.1% from 56% in the year-ago period. Management attributed the bulk of this decline to the Rapid acquisition.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Proto Labs. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool has a disclosure policy.