Please ensure Javascript is enabled for purposes of website accessibility

3D Systems vs. Stratasys: Which Had the Better Q4 Earnings Results?

By Beth McKenna - Mar 16, 2020 at 9:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's how things stack up in a metric-to-metric comparison of the two leading 3D printing companies.

3D Systems and Stratasys have reported fourth-quarter 2019 results, which we're going to compare metric for metric. (3D Systems' results here and Stratasys' here). 

Remember, qualitative factors can be just as meaningful as quantitative ones and we're just looking at one quarter. However, even with these caveats, the findings from this exercise should help you make investing decisions in the 3D printing space.

A man and a woman, dressed in dark business attire, in starting positions on a running track.

Image source: Getty Images.

Revenue 

Company

Q4 2019 Result

3D Systems (DDD -4.63%)

$164.6 million, down 8.9% from the year-ago period

Stratasys (SSYS -14.83%)

$160.2 million, down 9.5%

Data sources: company earnings reports.

Advantage: Tie.

Both companies experienced sizable year-over-year sales declines in the fourth quarter. These declines were very similar percentage-wise, so I'm calling this category a draw. 

Both companies cited a soft global macroeconomic industrial environment as the main culprit for their struggles. In addition, 3D Systems also named two other factors: the delay in factory metals printing shipments and the timing of large enterprise customer orders.

Unfortunately, that weak macroeconomic environment they experienced in Q4 is poised to get much weaker due to the COVID-19 pandemic.

GAAP earnings per share (EPS)

Company

Q4 2019 Result

3D Systems

($0.04), flat with ($0.04) in the year-ago period

Stratasys

($0.05), down from $0.12

Data sources: company earnings reports. GAAP = generally accepted accounting principles. 

Advantage: 3D Systems.

Both companies had an unprofitable quarter from a GAAP basis, with their results quite similar. 3D Systems gets this win, however, because its results at least held steady, while its rival's results deteriorated considerably from the year-ago quarter. 

Adjusted EPS

Company

Q4 2019 Result

3D Systems

$0.05, down 50% from $0.10 in the year-ago period

Stratasys

$0.18, down 14% from $0.21

Data sources: company earnings reports.

Advantage: Stratasys.

Stratasys takes the gold medal here. Its non-GAAP (adjusted) profit per share declined only slightly from the year-ago period, while 3D Systems' results were cut in half. 

The Stratasys logo.

Image source: Stratasys.

GAAP gross margin

Company

Q4 2019 Result

3D Systems

43.6%, down from 45.7% in the year-ago period but slightly higher than the third quarter's 43.3% 

Stratasys

49.1%, flat with the year-ago period but slightly lower than the third quarter's 49.3% 

Data sources: company earnings reports.

Advantage: Stratasys.

Stratasys comes out on top again. Its GAAP gross margin was 5.5 percentage points higher than 3D Systems'. Moreover, Stratasys' gross margin was flat with the year-ago period's, while 3D Systems' declined.

A higher gross margin relative to a competitor with a similar business profile often reflects stronger pricing power.

Liquidity -- net cash on hand and operating cash flow

 Company 

Q4 2019 Result

3D Systems

$133.7 million in cash and cash equivalents. Generated $21.5 million in cash from operations in the quarter. 

Stratasys

$321.8 million in cash and cash equivalents. Used $3.4 million in cash in operations in the quarter.

Data sources: company earnings reports.

Advantage: Tie.

There's no clear winner here. Stratasys has much deeper pockets than 3D Systems, which gives it a big advantage in acquisitions and the ability to weather prolonged tough times. However, 3D Systems generated cash from its operations in the quarter, while Stratasys used up some cash.

On the third quarter's earnings call, Stratasys CFO Lilach Payorski explained why the company was using cash in its operations this year. (For full-year 2019, Stratasys used $11.2 million in operations, a relatively small amount relative to its cash hoard.) She said it was "primarily due to proactive steps to increase inventory levels to improve fulfillment time and support product demand as well to prepare for new product launches in 2020." 

Research and development spending

Company

Q4 2019 Result

3D Systems

$17.1 million, or 10.4% of revenue   

Stratasys

$24 million, or 15% of revenue   

Data sources: company earnings reports.

Advantage: Stratasys.

Stratasys spent significantly more money -- both on an absolute basis and as a percentage of revenue -- on R&D than did its competitor.

R&D spending is an investment. It's particularly important for companies in the technology realm to invest in innovation, or they risk obsolescence. 

The winner is... Stratasys 

Score: Stratasys: 3; 3D Systems: 1 tie: 2.

Keep in mind the two caveats mentioned at the beginning of this article: Qualitative factors can be as important as quantitative ones, and we only looked at one quarter's results. Moreover, we didn't look at stock valuations.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

3D Systems Corporation Stock Quote
3D Systems Corporation
DDD
$9.47 (-4.63%) $0.46
Stratasys Ltd. Stock Quote
Stratasys Ltd.
SSYS
$16.20 (-14.83%) $-2.82

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
322%
 
S&P 500 Returns
113%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.