Related tickers: ExOne Co (NASDAQ:XONE), 3D Systems Corporation (NYSE:DDD), and Stratasys, Ltd. (NASDAQ:SSYS)
A company that went public recently is turning profits for the first time. With only three months as a public company, investors should be very happy with this performance. The three dimensional (3D) printing industry is growing pretty fast, and there’s a lot of excitement about it right now. It is definitely worth taking a closer look.
Earnings overview
ExOne Co (NASDAQ:XONE) is a manufacturer and distributor of three-dimensional printers and printing accessories. It operates in the Americas, Europe, and Asia. It serves companies in various industries, supporting prototype, production, and other parts manufacturing.
It posted $12.7 million in revenue for the fourth quarter ending Dec. 31 last year. This is a huge growth of 370% from the same quarter the previous year. On this revenue, the company earned $900,000 in net income for the quarter.
This translates to roughly $0.07 in earnings per share for the company’s 13.8 million shares. Wall Street analysts were expecting $0.08 on a per share basis. The company lost about $10.7 million over the course of the year, though. Total revenue came in at $28.6 million as the new orders came in.
Operations breakdown
More than half of sales last year came from new machines. ExOne Co (NASDAQ:XONE) sold a total of 13 three-dimensional printing machines in 2012. The average price of each machine was $1.2 million. Because the company is so small, it benefits drastically from a slight increase in sales. If just one more printer is sold, the overall revenue could grow by a potential 4.2%.
46% of all sales were for printing supplies. As more printers are sold, supplies sales will grow. It makes sense that more revenue would come from printers at the beginning. Residual revenue will be made primarily from supplies, while one-time large revenue will be earned from actual printers. As the capabilities of three-dimensional printing become popular, this company will continue to see higher revenue.
Also, gross margins improved from 23.8% in 2011 to 42.4% in 2012. This is largely due to the increase in printer sales. The company has higher margins on the total machine than it does on accessories and supplies.
As the market and demand for three-dimensional printers grows this year, so will the stock price of this company. A one-year price target is over 10% higher than its current valuation. But this will happen only if the company can manage growth and enter in to full-year profitability.
It will have to face competition, as well.
3D Systems Corporation (NYSE:DDD)
3D Systems Corporation (NYSE:DDD) offers three-dimensional printing to both companies and consumers. It has national distribution and offers ancillary services around prototyping, product building, and other manufacturing.
This company has been the market leader for 3D printing and witnessed rapid growth in 2012. Its revenue grew 53% to $353 million for the year. Its net income increased even more, jumping to $67.9 million. This represents a gross margin of 51.34% for the trailing twelve months. It is higher than ExOne due to its longer operations and better position in the market.
The company has had such strong growth that investors are worried about sustainability. Management announced an expected growth of 24% next year. This is on track with industry growth. While impressive, if the company only maintains 24% growth, it is barely keeping up. Still, this company is rated as a strong buy. It is an industry leader in a growing industry. It may lose potential market share to companies like ExOne, but it will still grow for the next few years.
Stratasys, Ltd. (NASDAQ:SSYS)
Stratasys, Ltd. (NASDAQ:SSYS) is the second largest company in this industry, right behind 3D Systems Corporation (NYSE:DDD). For 2012, the company saw revenue growth of 30%. This is the lowest revenue growth of the group. But, it may have the ability to continue at a stable growth rate for the next few years.
Its gross margins are also strong at 51%. After the Objet merger, the company’s market cap grew by about $1.4 billion. With this merger having been completed, full year revenue is expected to be $420 million this year, a major jump from last year’s $215 million.
Because of the company’s steady growth in the past and new size due to its acquisition activities, the stock has a large upside potential this year.
This industry is likely to grow 25% annually for the next six years. Global 3D printing will be a $3.1 billion industry by 2016 and near $20 billion by 2020. This is a great industry for investors to take a look as it rapidly grows and becomes a game changer.
The right pick
Investors really can’t go too wrong with any of these stocks. ExOne is new and exciting, and has a lot of growth potential. But, with a fresh IPO, there is some inherent price and control risk. Stratasys will see some excellent growth after its merger, and may take away market share from the leader — 3D Systems Corporation (NYSE:DDD).
My pick for this lot is 3D Systems Corporation (NYSE:DDD). It is the most established and has steady growth. The company serves both companies and individuals, so it is slightly more diversified. It will likely lose some market share in the next year, but total industry growth will more than make up for it.
The article 3 Stocks to Benefit From the 3D Printing Boom originally appeared on Fool.com and is written by Austin Higgins.
