Please ensure Javascript is enabled for purposes of website accessibility

Why Stratasys Stock Is Soaring After Earnings

By Rich Smith - Mar 1, 2021 at 11:27AM

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

Stratasys wasn't supposed to earn a profit in the fourth quarter -- but it did.

What happened

Shares of 3D printer maker Stratasys (SSYS 4.42%) had soared 10.8% as of 11:15 a.m. EST Monday after the company announced a huge earnings beat before the market opened.

Expected to report only breakeven profits for its fiscal fourth quarter of 2020 today, Stratasys surprised the market with a report of $0.13 per share earned, pro forma, on sales of $142.4 million (also ahead of expectations).  

Green stock arrow shooting up among the numerals 2021

Image source: Getty Images.

So what

The news wasn't all great. While beating expectations for $135.3 million, quarterly sales actually declined 11% year over year in Q4. Gross profit margin on those sales fell 270 basis points to 46.4%, and the company suffered an operating loss.

Nevertheless, with tax credits added back, Stratasys ended up earning a net profit for the quarter -- $0.20 per share, when calculated according to generally accepted accounting principles (GAAP) -- which was actually better than the pro forma number and way ahead of analyst expectations.

Perhaps best of all, Stratasys noted that "it produced the highest operating cash flow in almost three years" in Q4.  

Now what

CEO Yoav Zeif opined that, based on the momentum seen in the second half of 2020, Stratasys believes it is "starting to enter a meaningful, sustained trajectory of unprecedented growth" and asserted that "Stratasys is well-positioned to grow, armed with a strong balance sheet with no debt."

Management forecasts that revenue in the first quarter of 2021 will be only "relatively similar to the first quarter of 2020," but that second-quarter 2021 revenue "should approximate mid-teens percentage growth year-over-year." In other words, after the pandemic-caused slump midyear, Stratasys is already back to normal -- and sales will only accelerate from here.

No wonder investors are cheering.

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

Stratasys Ltd. Stock Quote
Stratasys Ltd.
$19.12 (4.42%) $0.81

*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 service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

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.