Voxeljet: 3-D Printing's Newest Public Player

Additive manufacturing (better known as 3-D printing) stocks have certainly been on a roll. So, when Germany's voxeljet (yes, small "v") filed for an initial public offering last month, the only question was how pricey would it be? Terms hadn't been released when I highlighted the company, so we couldn't get a feel for valuation. Terms have now been released, so let's look at how the company's valuation will stack up against those of its three primary publicly traded competitors: 3D Systems (DDD -1.15%), Stratasys (SSYS -1.11%), and The ExOne Company (XONE).

IPO details
Voxeljet AG will trade on the NYSE under the ticker VJET. It's expected to begin trading on Thursday (some reports slate the date for Oct. 17, others for Oct. 18). 

Pricing is planned in the $13-$15 per American depository share range, which (at the $14 midpoint) would raise $91 million, as 6.5 million shares will be offered. Its market cap would be $218.4 million at the midpoint, as there will be 3.12 million ordinary shares outstanding after the offering (41% of them represented in the form of American depository shares, each of which is equivalent to one-fifth an ordinary share). 

Insiders' stake
Insiders will still have considerable skin in the game -- a 31% combined stake -- after the offering. Founder and CEO Dr. Ingo Ederer's stake will be 19.6%, CFO Rudolf Franz's will be 8.8% (entirely held in a venture firm in which he and his wife are managing directors), and supervisory board (equivalent to the U.S. board of directors) member Dr. Joachim Heinzl's will be 2.4%. 

There are also three outside venture firms that will still own a 5% or greater share after the offering: Startkapital-Fonds Augsburg (8.8%), AleSta Beteiligungs (6.5%), and Technologie Beteiligungsfonds Bayern (5.9%).

Voxeljet's business
The company provides high-speed, large-format, 3-D printers (46% of revenue in first half of 2013) and on-demand parts services (54% of revenue) to industrial and commercial customers. It was founded in 1999, so don't let its newness to the publicly traded ranks mislead you into believing it's a newer company eager to cash in on a hot industry. 

Its materials capabilities include several sands and plastics. Its printers use powder binding technology, and are priced between $163,000 and $2.1 million. ExOne is the primary competitor on the sand end, as its machines also produce sand molds, which industrial customers use to cast metal components. 3D Systems and Stratasys are the public company competitors on the plastics end.

Its competitive advantages include the size and speed of its systems. The company claims that it offers the largest build box commercially available. Additionally, the company offers a system which can print parts in two dimensions and a theoretically unlimited third dimension by using a conveyor belt system. This means it can be incorporated into customers' production lines to print off a continuous line of parts. It believes that this is the only continuous build 3-D printer on the market.

Customers include 3M, Daimler, BMW, Ford, and Volkswagen. 

Voxeljet vs. competitors
Here's how voxeljet ranks relative to its main competitors on several key metrics, including valuation: 

Source: Yahoo! Finance. *If priced at $14 per share. Revenue and margin data is for the trailing 12 months.

Valuation discussion
Voxeljet, like Stratasys and ExOne, isn't profitable on a trailing-12-months basis, so we can't compare price-to-earnings ratios. While the P/E has its drawbacks (namely, reported earnings and cash flow aren't always in sync), the P/S is an even weaker valuation measure. Keep that in mind -- we need to work with what we have, and it does provide some insight.

On a P/S basis, voxeljet priced at $14 per share is pricey, both absolutely and relative to 3D Systems and Stratasys. However, it falls right in line with ExOne's valuation. We'd expect ExOne and voxeljet, given their smaller sizes and newness to the public markets, to sport loftier valuations than the more established 3D Systems and Stratasys.

While voxeljet wasn't profitable for the one-year period ending June 30, it was profitable in both 2012 and, albeit very slightly, in 2011. I mention this because simply stating that a company which is going public wasn't profitable during its most recent one-year period and, thus, has no P/E would likely lead many to believe the company has yet to break even. I discuss voxeljet's 2012 profitability and what affected its profitability during the one-year period ending June 30 in this article. 

Takeaway
Voxeljet -- priced at $14 per share -- is very richly valued from an absolute standpoint. However, from a relative valuation standpoint, it seems appropriately priced. It's in an industry where all the pure plays sport very high valuations, not surprising given that the overall industry is projected to grow 20%-30% annually over the next five years.  

Voxeljet's outlook seems promising, but it's very early in the game. As I've previously cautioned, 3-D printing stocks are only suitable for those with tolerance for high risk, given their high valuations and volatility.