On Monday, both 3D Systems and Stratasys released their fourth-quarter 2020 reports. (3D Systems' results are here.) We're going to compare the two 3D printing companies' results metric for metric.
Keep in mind that qualitative factors can be just as important as quantitative ones, and we're looking at just one quarter's worth of data. Even with these caveats, however, the findings from this exercise should help you make investing decisions in the 3D printing space.
Also, note that 3D Systems' results were only preliminary. The company said it was filing the appropriate form with the Securities and Exchange Commission to extend the deadline for filing its official results.
Image source: Getty Images.
Revenue
|
Company |
Q4 2020 Results |
|---|---|
|
3D Systems (DDD +0.53%) |
$172.7 million, up 2.6% from the year-ago period |
|
Stratasys (SSYS 0.72%) | $142.4 million, down 13% from the year-ago period |
Data sources: company earnings reports.
Advantage: 3D Systems.
3D Systems wins this category since its revenue increased year over year, though modestly, while its competitor's revenue declined.
That said, neither company is performing well from a sales growth perspective. Both were struggling to grow revenue before the COVID-19 pandemic, and their struggles intensified when it began. That's largely because many of their customers and potential customers in the industrial sector temporarily halted operations during the crisis.
On the flip side, however, the pandemic could prove to be a long-term growth catalyst for their businesses. Some companies used 3D printing to produce some critical components when their usual supply chains were disrupted.
For the full year, 3D Systems and Stratasys posted revenue declines of 12% and 18%, respectively.
GAAP earnings per share
|
Company |
Q4 2020 Result |
|---|---|
|
3D Systems | ($0.16), down from ($0.04) in the year-ago period |
|
Stratasys | $0.20, up from ($0.05) in the year-ago period |
Data sources: company earnings reports. GAAP = generally accepted accounting principles.
Advantage: N/A.
Looking at just the headline numbers, it might appear that Stratasys wins on this metric since it generated a GAAP profit and 3D Systems did not.
However, it seems fairer to throw this category out. The only reason Stratasys reported a profit was because of a big income tax benefit that was larger than its operating loss.
Neither company took a goodwill impairment charge in the fourth quarter (as they both did in the third quarter), so that line item wasn't a factor in the GAAP results.
Adjusted EPS
|
Company |
Q4 2020 Result |
|---|---|
|
3D Systems | $0.09, up from $0.05 in the year-ago period |
|
Stratasys | $0.13, down from $0.18 in the year-ago period |
Data sources: company earnings reports.
Advantage: 3D Systems.
3D Systems gets the win here, as its adjusted EPS increased from the year-ago period, while Stratasys' went in the opposite direction. That said, 3D Systems had an easier comparable.
Adjusted gross margin
|
Company |
Q4 2020 Result |
|---|---|
|
3D Systems | 42.9%, down from 44.3% in the year-ago period |
|
Stratasys | 49.5%, down from 52.4% in the year-ago period |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys easily wins this category. Why does this metric matter? A higher gross margin relative to a competitor with a similar business can reflect stronger pricing power.
Liquidity -- operating cash flow and cash on hand
|
Company |
Q4 2020 Results |
|---|---|
|
3D Systems |
|
|
Stratasys |
|
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys is the victor here. It had more cash on hand than did 3D Systems. Investors should note, however, that soon after the fourth quarter ended, 3D Systems closed on the sale of its non-core software businesses, Cimatron and GibbsCam. It paid off its outstanding debt of $21.4 million using a portion of the $64.2 million in proceeds it generated from the sale.
We can't compare operating cash flows because 3D Systems didn't provide this data in its preliminary results. It said in the earnings release that the delay in filing its official results was "primarily related to the presentation of cash flows associated with the divestiture process" for Cimatron and GibbsCam. That said, we do know from the earnings call and presentation that the company returned to generating positive operating cash flow in the quarter.
Research and development spending
|
Company |
Q4 2020 Result |
|---|---|
|
3D Systems |
$19.0 million, or 11% of revenue |
|
Stratasys |
$19.0 million, or 13.3% of revenue |
Data sources: company earnings reports.
Advantage: Tie.
I'm calling this category a tie. Stratasys spent a higher percentage of its revenue on R&D, which which is usually the best metric to gauge this type of spending. That said, the only reason its percentage was higher than its rival's is that its revenue fell more in 2020.
Indeed, the two companies generated nearly identical revenues in 2019 (3D Systems: $636.4 million; Stratasys: $636.1 million). In other words, they both were probably setting R&D budgets for 2020 based on approximately the same amount of revenue.
Investing in R&D is critical for companies in the technology space if they want to stay competitive.
The winner is... it's a tie
Score: 3D Systems: 2.5 points; Stratasys: 2.5 points
Keep in mind the two caveats mentioned at the top of this article: Qualitative factors can be as important as quantitative ones, and we only considered one quarter's results.
Moreover, we also didn't look at stock valuations. In terms of share prices, in 2021, 3D Systems was up by 197% through Tuesday, while Stratasys was up by nearly 56%. The S&P 500 gained 3.3% over this period.
