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Why Is Stratasys (SSYS) Up 3.3% Since the Last Earnings Report?

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It has been more than a month since the last earnings report for Stratasys, Ltd. (SSYS - Free Report) . Shares have added about 3.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Stratasys Q3 Earnings Top, Revenues Miss, '17 View Up

Stratasys reported mixed results for third-quarter 2017, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. Furthermore, although revenues witnessed a marginal fall, earnings improved significantly on a year-over-year basis.

For the third quarter, the company reported non-GAAP earnings per share of 8 cents, which surpassed the consensus mark of 4 cents.

The year-over-year improvement in the bottom line was mainly driven by the company’s consistent focus on reducing operating expenses, partially offset by lower revenues.

Quarter Details

Stratasys’ revenues of $155.9 million missed the Zacks Consensus Estimate of $162 million. Also, on a year-over-year basis, the figure dipped 0.8% mainly due to a fall in Product revenues.

Segment wise, Product revenues were down 2% from the year-ago quarter to $108.4 million mainly due to a 6% decline in System sales, which was affected by a shift in product mix toward the lower-end system. Also, severe weather conditions in North America during September negatively impacted segmental revenues.

Revenues from Services, however, were up 1% year over year to $47.5 million. The increase was primarily due to 5% growth in customer support revenues driven primarily by growth in the installed base of systems.

Stratasys’ non-GAAP gross margin contracted 150 basis points (bps) to 52.5%, primarily due to the shift in product mix and lower revenue base.

The company’s non-GAAP operating expenses decreased 10% year over year to $73.8 million, primarily due to the company’s continuous focus on improving operating efficiencies. Also, as a percentage of revenues, non-GAAP operating expenses went down year over year from 51.9% to 47.3%. The decrease was primarily due to lower research and development expenses, and selling, general and administrative expenses.

The company posted non-GAAP operating income of $8.1 million in the reported quarter compared with $3.3 million in the year-ago quarter. Operating margins came in at 5.2% compared with 2.1% reported in the year-ago quarter.

The company exited the quarter with cash and cash equivalents of $302.8 million compared with $305.3 million at the end of the previous quarter. Inventories came in at approximately $124.1 million compared with $116.5 million in the previous quarter. Long-term debt as of Sep 30, 2017, came in at $19.5 million.

Guidance

Stratasys updated its full-year 2017 outlook. The company now expects revenues in the range of $655-$670 million, up from the previous guidance of $645-$680 million. Non-GAAP earnings per share are now projected between 40 cents and 48 cents, up from the previous guidance of 19 cents and 37 cents.

Furthermore, the company now anticipates non-GAAP operating margin to be in the range of 5-6% (previous guidance 3-5%). Capital expenditure is now estimated in the range of $20-$30 million, down from the previous guidance range of $40-$50 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

Stratasys, Ltd. Price and Consensus

 

Stratasys, Ltd. Price and Consensus | Stratasys, Ltd. Quote

VGM Scores

At this time, the stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.

Our style scores indicate that the stock is solely suitable for growth investors.

Outlook

The Zacks Consensus Estimate for the current quarter moved up over the last 30 days. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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