What we’re looking for
The graphs you’re about to see tell Stratasys, Ltd. (NASDAQ:SSYS)’ story, and we’ll be grading the quality of that story in several ways:
Growth: Are profits, margins, and free cash flow all increasing?
Valuation: Is share price growing in line with earnings per share?
Opportunities: Is return on equity increasing while debt to equity declines?
Dividends: Are dividends consistently growing in a sustainable way?
What the numbers tell you
Now, let’s take a look at Stratasys, Ltd. (NASDAQ:SSYS)’ key statistics:
SSYS Total Return Price data by YCharts
| Passing Criteria | 3-Year* Change | Grade |
|---|---|---|
| Revenue growth > 30% | 172.3% | Pass |
| Improving profit margin | (728%) | Fail |
| Free cash flow growth > Net income growth | (165.9%) vs. (364.3%) | Pass |
| Improving EPS | (183.6%) | Fail |
| Stock growth (+ 15%) < EPS growth | 210.7% vs. (183.6%) | Fail |
Source: YCharts and Morningstar.
*Period begins at end of Q1 2010.
SSYS Return on Equity data by YCharts
| Passing Criteria | 3-Year* Change | Grade |
|---|---|---|
| Improving return on equity | (145.1%) | Fail |
| Declining debt to equity | No debt | Pass |
Source: YCharts.
*Period begins at end of Q1 2010.
How we got here and where we’re going
This isn’t a particularly good showing for such a popular stock, and a big reason for that is the big decline in net income seen over the last few quarters. However, free cash flow hasn’t been doing well, either. Stratasys, Ltd. (NASDAQ:SSYS) began the tracking period with positive free cash flow, but has since sunk into the red there. There’s a great deal of optimism surrounding 3-D printing, but the actual results don’t always match up to the hype. Stratasys also significantly underperforms its sector peer 3D Systems Corporation (NYSE:DDD), which earned five out of seven passing grades on this analysis late last year. But is this just a temporary blip, or indicative of long-term earnings weakness?
