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3D Printing's Newest Product: Ramped-Up Revenue

17 August 2013 in Trading Ideas

Nothing helps investors get a handle on a new technology like improved operating numbers.

Traders may not exactly know the specifics behind “printing” a firearm, for example, but tell them that a publicly traded 3D printer just posted 115% year-over-year revenue growth, and they’ll probably want to know more.

Improved metrics as exhibited in the earnings reports by several 3D printing companies over the past few weeks has helped fuel a recent rise in many of their respective stocks. That has helped boost the 3D Printing motif to a 2.6% rise in the past month. Over that same period, the S&P 500 is down 1.3%. Since the motif’s creation on Jan. 13, 2013, it has gained 17.2%; the S&P 500 has risen 14.8% in that same period.

Consider the recent results from Ansys and Stratasys, which contribute more than 37% of the motif’s weight.

Stratasys posted a loss for its most recent quarter, but the results beat the expectations of Wall Street, which has been closely watching how quickly the company can integrate its merger with Objet. Revenue growth of 115% over results of the year-ago, also likely helped the cause.1

For Ansys, revenue growth was only 10.9% above last year’s quarter, but that figure and the company’s operating profit handily beat Wall Street’s estimates, sending the stock soaring by 12% after its quarter-end profit report was released.2

Interestingly, both stocks were helped by delivering some rays of hope after the disappointing profit report late last month by peer 3D Systems (15% of the motif’s weight), which missed Wall Street’s operating profit expectations. Still, the company’s quarterly revenue rose by 45%.3

At this point, investors of many 3D printing companies appear willing to support higher prices as revenue growth keeps alive the hope that it will eventually translate to the bottom line.

1Zacks Equity Research, “Stratasys Posts Solid Q2 Earnings,” Aug. 12, 2013, http://finance.yahoo.com/news/stratasys-posts-solid-q2-earnings-133502606.html, (accessed Aug. 14, 2013).

2Derek Hoffman, “Ansys Earnings: Here’s Why the Stock is Rising Now,” wallstcheatsheet.com, Aug. 1, 2013, http://wallstcheatsheet.com/stocks/ansys-earnings-heres-why-the-stock-is-rising-now.html/?ref=YF, (accessed Aug. 1, 2013).

3Investor’s Business Daily, “3D Systems’ Profit Misses Expectations as Spending Jumps,” July 30, 2013, http://finance.yahoo.com/news/3d-systems-profit-misses-expectations-214300459.html, (accessed Aug. 14, 2013).