Although U.K-based precision measurement company Renishaw (LSE:RSW) only recently became involved in 3D printing, management is optimistic about its future growth prospects. Throughout its 2014 annual report, Renishaw highlighted that it experienced strong demand and growing interest from its two laser melting metal 3D printers, the AM125 and AM250.
In the following video, 3D printing specialist Steve Heller and industrials analyst Blake Bos discuss Renishaw's AM250 metal 3D printer relative to the competition, and also weigh in on an unconfirmed rumor they learned about while attending The Big M manufacturing conference in Detroit.
Rumor has it that Renishaw's next generation of direct metal 3D printers will be capable of real-time quality controls, a feature that could have game-changing implications for the 3D printing industry at large. Currently, the ability to perform quality assurance during a 3D printing job is very limited, and companies like General Electric spend a tremendous amount of resources to determine if a 3D-printed object meets its rigorous requirements for mission-critical aviation applications.
If Renishaw introduced a metal 3D printer with a robust suite of in-process quality controls before competitors, it could prove to be a potentially worrisome situation for 3D Systems (NYSE:DDD), because a portion of its future revenue growth is dependent on how well its own metal 3D printers are received in the marketplace. Still, investors should acknowledge that the majority of Renishaw's revenue isn't derived from the sale of its 3D printing products, meaning it may be difficult for investors to benefit from any success that Renishaw experiences in 3D printing. Going forward, 3D Systems investors should monitor Renishaw's future 3D printing developments to determine if it could have a material impact on 3D Systems' existing metal 3D printing portfolio.
A full transcript follows the video.
Blake Bos: We're going to talk about a company called Renishaw. A lot of our readers and watchers aren't familiar with this company. They're based out of the United Kingdom. They're traditionally a measurement company, so they go in and make sure parts are manufactured correctly -- quality assurance.
From what we've learned they bought a 3D printing company a few years ago, and they have their one 3D printer that does direct metal laser sintering.
So basically what's going on with that printer and how does it compare to the 3D Systems' printer, or EOS'? I mean, do they have something that's groundbreaking, what do you see there?
Steve Heller: I see that it's basically on par with the competition. It's a direct metal laser sintering printer. Its built chamber is gravity-fed so what that means is that the material relies on gravity to actually spread the material out. There are advantages and disadvantages, but really the parts actually coming out of the product are pretty much on par with everything else, but what makes Renishaw so interesting is the next generation.
Rumor has it that their next generation will have the ability to analyze each layer of the print build -- live.
Blake: With data.
Steve: With data. So if you're General Electric and you're printing fuel nozzles, you want to make sure that fuel nozzle is not going to fail when you're flying your plane. So knowing the data of each build and making sure that there's no inconsistencies, there's no contamination in the particles, there's nothing that's going to hinder the integrity of this part, it could be huge. If they would be the first ones to market with this, that could be a groundbreaking innovation for the industry.
Blake: Everybody would want to buy one.
Steve: Everybody would want to buy one. I'm sure they're going to patent it and that would well position the company for future growth and actually be, you know, maybe usurping EOS and 3D Systems in the metal for 3D printing space.
Blake: Yeah, because right now if a company prints out a part they have to do a lot of scanning and measurements to make sure it's up to spec.
Steve: A lot of qualifying.
Blake: A lot of qualifying, and if you could do it while it was building with computer algorithms...
Steve: You speed up the process.
Blake: You speed up the process a ton, that would be a huge selling point. So like you said, that's a huge takeaway, I think investors should really pay attention to that next...
Steve: There's definitely a new player to watch, I think.
Blake: You want to look at that new printer that comes out and you actually can invest in this company, Steve, on the London Stock Exchange.
Steve: Yeah, exactly.
Blake: The ticker is RSW. Keep in mind, though, folks, a very small portion of their revenue comes from 3D printing, it's not a pure play, so if you want to invest in a company, just 3D printing, Renishaw is probably not the way to go, but you could take a look at it and do a little research and familiarize yourself with the company.
Steve: Yeah, just so you know focusing on the measurement dynamics, I mean, a big part of their business is measuring things and quality assurance, so focusing on those dynamics longer term to make sure that also fits into this growth trajectory as an investor.
Blake: And we haven't done a lot of research on the company because we just learned about it at the show, but it does look like it pays a dividend on the London Exchange and is at a cheaper valuation. So it could be a better alternative, but we'll need to do the homework and check it out a little bit more before we're confident on saying we think it's a good investment.
Blake Bos owns shares of Apple. Steve Heller owns shares of 3D Systems and Apple. The Motley Fool recommends 3D Systems, Apple, and Renishaw. The Motley Fool owns shares of 3D Systems, Apple, and General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.