We're going to compare 3D Systems' (DDD +1.06%) and Stratasys' (SSYS +0.24%) second-quarter results, which they reported earlier this summer. (3D Systems here and Stratasys here).
Keep in mind that qualitative factors can be just as meaningful as quantitative ones and we're just looking at one quarter. Even with these caveats, however, the findings from this metric face-off should help you make investing decisions in the 3D printing space.
Image source: Getty Images.
Revenue
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems |
$157.3 million, down 10.9% from the year-ago period |
|
Stratasys | $163.2 million, down 4.1% |
Data sources: company earnings reports.
Advantage: Stratasys.
Neither company is performing well from a revenue standpoint, as they both experienced year-over-year revenue contractions. That said, Stratasys performed better than its rival since its revenue decline was less steep. Both companies have been struggling to grow sales over the last few years.
Stratasys' revenue performance wasn't quite as weak as suggested by the numbers above. "After adjusting for the sales of our divested entities during 2018, total revenue decreased 2% for the quarter," CFO Lilach Payorski said on the earnings call.
GAAP earnings per share (EPS)
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems | ($0.21), down from ($0.08) in the year-ago period |
|
Stratasys | $0.02, up from ($0.08) |
Data sources: company earnings reports. GAAP = generally accepted accounting principles.
Advantage: Stratasys.
Stratasys is the clear winner here. It posted positive GAAP earnings, while 3D Systems posted a loss. Moreover, its loss widened from the year-ago period.
Adjusted EPS
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems | $0.00, down from $0.06 in the year-ago period |
|
Stratasys | $0.16, up from $0.15 |
Data sources: company earnings reports.
Advantage: Stratasys.
Once again, Stratasys is the victor. Its non-GAAP, or adjusted, profitability increased a little from the year-ago quarter, while 3D Systems just broke even.
Image source: Stratasys.
GAAP gross margin
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems | 46.6%, down from 48.8% in the year-ago period, but up from 43.2% in the first quarter |
|
Stratasys | 49.7%, up from 49.1% in the year-ago period and also higher than 49.2% in the first quarter |
Data sources: company earnings reports.
Advantage: Stratasys.
Yep, Stratasys takes the crown again. Its GAAP gross margin was more than 3-percentage points higher than 3D Systems.'
On a positive note, 3D Systems' gross margin did at least improve quite solidly -- more than 3 percentage points -- from the first quarter.
A higher gross margin relative to a competitor can reflect better operating efficiency and/or stronger pricing power.
Liquidity -- net cash on hand and operating cash flow
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems |
$150.4 million of cash and cash equivalents. Generated $18.7 million in cash from operations in the quarter. |
|
Stratasys |
$366.3 million in cash and cash equivalents. Used $3.8 million in cash from operations in the quarter. |
Data sources: company earnings reports.
Advantage: tie.
I'm calling this one a draw since each company won one aspect of this category. Stratasys has much more cash than 3D Systems, which could give it an advantage with respect to things like acquisitions and research and development spending.
3D Systems, however, generated cash in the quarter, while Stratasys used cash in its operations. This is a flip-flop from recent quarters. In the first quarter, 3D Systems gobbled up $15.2 million in cash in its operations and Stratasys spewed off cash.
Research and development spending
|
Company |
Q2 2019 Result |
|---|---|
|
3D Systems |
$20.8 million, or 13.2% of revenue |
|
Stratasys |
$24.0 million, or 14.7% of revenue |
Data sources: company earnings reports.
Advantage: tie.
I'm also calling this one a tie, since the two 3D printing companies are spending a fairly similar absolute amount and percentage of their total revenue on R&D.
Investors should watch this category. Investing in innovation is critical for companies in the technology realm. We don't want to see either company cut back much on R&D in an effort to increase earnings and generate cash.
2019 guidance
|
Company |
2019 Guidance |
Projected Year-Over-Year Changes |
|---|---|---|
|
3D Systems |
Did not provide official guidance. |
N/A |
|
Stratasys |
Revenue of $670 million-$700 million; adjusted EPS of $0.55-$0.70; and a GAAP loss per share of $0.31 to $0.05. |
Revenue: 1% to 5.5%; adjusted EPS: 6% to 35%; GAAP EPS: loss widening by 41% to loss contracting by 77% from 2018's result of a loss of $0.22 per share. |
Data sources: Q4 2018 earnings reports and conference calls.
Advantage: N/A.
As with 2018, 3D Systems didn't provide guidance for 2019.
The winner is... Stratasys
Image source: Getty Images.
Final score: Stratasys: 4; 3D Systems: 0; tie or N/A: 3.
Keep in mind the caveats I mentioned: Qualitative factors can be as important as quantitative ones, and we examined only one quarter's results. Moreover, we didn't look at stock valuations.
As to their stocks, perhaps not surprisingly given the results of this face-off, Stratasys has been clobbering 3D Systems. Its shares have gained 36% so far in 2019 through Sept. 13, while shares of 3D Systems are down 16.5%. The S&P 500 has returned 21.7% over this period.
