Stratasys Ltd. Earnings: Will Monday's Results Top 3D Systems'?

Stratasys (SSYS 2.56%) will release its quarterly report on Monday, and investors have high hopes for the 3-D printing company, especially after rival 3D Systems (DDD 1.58%) posted impressive results Friday morning. Yet even though the immediate response in the market was to push 3D Systems shares up sharply, many investors believe that Stratasys could have even better growth prospects in both the consumer and industrial segments of the budding 3-D printing industry.

Stratasys and 3D Systems get lumped in with ExOne (XONE) and voxeljet (VJET -10.81%) in the eyes of many investors, who see 3-D printing companies as essentially giving them the same exposure to the fast-growing industry. But the approaches these companies take differ greatly. For Stratasys, large-scale acquisitions have helped it hone its focus to a fine point, helping the company's leaders define the strategic path that Stratasys will take. Yet with increasing competition, it'll be increasingly tempting for Stratasys to take more aggressive measures to boost market share. Let's take an early look at what's been happening with Stratasys over the past quarter and what we're likely to see in its report.

Source: Stratasys.

Stats on Stratasys

Source: Yahoo! Finance.

Which way are Stratasys earnings headed?
Analysts have clamped down on their views on Stratasys earnings in recent months, reducing their fourth-quarter estimates by a penny and cutting their full-year 2014 projections by about 5%. The stock has risen by 9% since late November in a fairly turbulent quarter for share prices.

Most of those analyst moves came last month, when Stratasys gave guidance for 2014 that fell short of what investors had hoped to see. Although the company projected that its revenue would climb at a faster pace than expected, full-year adjusted earnings estimates of $2.15-$2.25 per share disappointed those who were looking for faster net income growth. Even though Stratasys attributed much of the earnings hit to capital expenditures aimed at growing its business, it believes lower operating margins at its consumer-oriented MakerBot subsidiary will hold back stronger margins in Stratasys' core business. The somewhat gloomy predictions have run rampant in the industry, as 3D Systems and ExOne made similar calls in the past couple of months.

Yet Stratasys has worked hard to make new advances in the 3-D printing space. Its Objet500 Connex3 printer recently became the first 3-D printer that can deal with multiple materials in full-color pallets at one time, staking its claim and helping move the industry close to being able to help customers manufacture a much wider variety of items much more efficiently. Moreover, its 3-D scanning MakerBot Digitizer and a new partnership to produce 3-D object sensors to help recognize gestures and facial features could push Stratasys in a lucrative long-term direction.

The competition between Stratasys' MakerBot and 3D Systems continues to run hot. At the Consumer Electronics Show, 3D Systems came out with more than a dozen products and collaborations, including two completely new printers aimed at professionals. With 3D Systems succeeding in making products available to customers at attractive price points even for new models, Stratasys will need to up its game in order to keep up the pace. That makes the company's decision to partner with Dell encouraging, and it could pay big dividends for MakerBot and Stratasys if it lets the 3-D printing company take advantage of Dell's immense network of business customers.

The most important partner for Stratasys might turn out to be the Oak Ridge National Laboratories. With ORNL working with Lockheed Martin to build large-scale parts reinforced with carbon-fiber material, Fool contributor Beth McKenna believes that Stratasys is almost certainly involved in creating the prototype 3-D printer making the project possible. With size and materials being the limiting factors in 3-D printing at the moment, these efforts are important in helping make 3-D printing more useful for a wider range of customers.

In the Stratasys earnings report, watch to see whether the company fares as well as or better than 3D Systems did with its latest figures. With its main rival predicting $1 billion in revenue by 2015, Stratasys will need to make equally impressive forecasts in order to keep the competition even.

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