A month has gone by since the last earnings report for Stratasys, Ltd. (SSYS - Free Report) . Shares have added about 12.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-Quarter 2016 Results
Stratasys reported adjusted income per share (excluding amortization, impairment and other one-time items but including stock-based compensation) of $0.09 for the fourth quarter of 2016. The Zacks Consensus Estimate was of a loss of $0.06 per share. In the year-ago quarter, the company had incurred a loss of $0.19.
On a GAAP basis, the company reported loss of $0.30 per share compared with a loss of $4.46 per share reported in the year-ago quarter.
Stratasys’ revenues not only increased 1.1% year over year to $175.3 million, but also surpassed the Zacks Consensus Estimate of $170 million. Product revenues were up 2% from the year-ago quarter to $127 million. Revenues from Services were almost flat year over year to $49 million. The company’s timing of new product introductions and improved organizational changes at MakerBot benefitted the quarter’s revenues.
Stratasys’ adjusted gross margin (excluding amortization and other one-time expenses but including share-based compensation) expanded 580 basis points (bps) to 53.3%, primarily due to favourable product mix, lower cost of sales and higher revenues.
The company’s adjusted operating expenses decreased 13.1% year over year to $86.6 million, primarily due to a lower cost structure. Also, as a percentage of revenues, operating expenses decreased year over year from 57.5% to 49.4%. The decrease was primarily due to lower research and development expenses and selling, general and administrative expenses.
The company posted adjusted operating income of $6.7 million in the reported quarter compared with adjusted operating loss of $17.3 million reported in the year-ago quarter.
The company exited the quarter with cash and cash equivalents and short-term bank deposits of $280.3 million compared with $239.3 million in the previous quarter. Inventories came in at approximately $117.5 million compared with $127 million in the second quarter. Long-term debt during the quarter amounted to $22.3 million.
The company generated $26 million cash flow from operations during the quarter.
Stratasys provided its full-year 2017 revenues and earnings guidance. The company expects revenues in the range of $645 million–$680 million. Non-GAAP income per share is projected between $0.19 and $0.37.
For full-year 2017, the company expect non-GAAP Operating margin to be in the range of 3–5%. Capital expenditure is expected to be in the range of $40 million–$50 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downard revisions for the current quarter. In the past month, the consensus estimate has shifted downard by 71.4% due to these changes.
At this time, Stratasys' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. Following the exact same course, the stock was allocated also a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.