Is a Surprise Profit in Store for ExOne Earnings?

ExOne (XONE) will release its quarterly report on Tuesday, and the 3-D printer maker has already led investors to have high expectations of the company going forward. Yet even if ExOne earnings don't make it into the black this quarter, the future looks increasingly bright as the promise of 3-D printing gets closer to becoming a broader reality.

ExOne doesn't have the same name recognition as some of its competitors in the 3-D printing space, but it offers a big competitive advantage in allowing users to make products that rely on a wide array of input products. Rather than simply using plastic, ExOne printers can use steel, ceramic, sand, glass, and bronze, with more materials coming in the near future. Let's take an early look at what's been happening with ExOne over the past quarter and what we're likely to see in its quarterly report.

Stats on ExOne

Source: Yahoo! Finance. * In two quarters since going public.

When will ExOne earnings turn profitable?
Analysts have reined in their optimism in recent months over ExOne earnings, doubling their loss estimates for the June quarter and cutting their full-year 2013 earnings projections by 80%. Nevertheless, the stock has continued to soar, climbing another 60% just since early May.

ExOne didn't start off the quarter on a very positive note, as it reported worse than expected first-quarter results in mid-May. Moreover, ExOne gave full-year sales guidance that fell short of what analysts had hoped to see from the company, raising fears about its tiny size and limited current scope across the industry.

Yet investors make a big mistake by lumping all 3-D printing companies together. Stratasys (SSYS 2.66%) and 3D Systems (DDD) have gotten the lion's share of investor attention by being first movers and maximizing their growth opportunity. Yet even though its printers are extremely expensive -- the company sold only five printers for $4.2 million in the first quarter -- ExOne's flexibility in allowing so many materials has forced a response from its larger competitors. Last month, 3D Systems closed on a deal to buy Phenix Systems to acquire its metal- and ceramic-printing capability.

Given time, ExOne could become the printer of choice among industrial users in the long run. In buying consumer-oriented MakerBot, Stratasys has divided its attention away from its traditional industrial niche, running the risk of falling behind if it can't match up to ExOne's printing capabilities. Already, General Electric (GE 0.68%) CEO Jeff Immelt has recognized the practical applications of 3-D printers in the aviation industry, and given ExOne's metal-working capacity, it seems like the most logical choice for a strategic partnership or even a takeover from GE if the conglomerate chose to go that route.

In the ExOne earnings report, watch to see whether system sales start to pick up as customers recognize the value of using 3-D printers with a variety of different input materials. It could take a while for industrial users to convince themselves to make such a big capital purchase, but once enough do, the results should help drive other customers into the space as well, creating a snowball effect that could push ExOne's growth well beyond current expectations.

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