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Why Stratasys Stock Is Soaring After Earnings

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

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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.

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