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Proto Labs Works for Capacity Expansion, Adds New Facility

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Proto Labs, Inc. (PRLB - Free Report) , in an attempt to leverage benefits from the growing demand for custom prototypes and low-volume production, recently added a new 152,000 square feet manufacturing facility to its portfolio.

Capacity expansion has been a priority for Proto Labs over time. Its capital allocation policy primarily includes acquisitions of meaningful businesses, returning capital to shareholders and investing in research and development activities as well as in equipment and manufacturing facilities.

In the last three months, the shares of this Zacks Rank #2 (Buy) company, yielded 20% return, outperforming the gain of 18.8% recorded by the industry. Its market capitalization is approximately $3.3 billion.

Business Strengthening Through Capacity Expansion

As noted, Proto Labs intends to shift its 225 employees working in the Plymouth, MN-plant to its new 152,000 sq. ft. manufacturing facility in Brooklyn Park, MN. This move will aid in injection-molding capacity expansion in the Plymouth plant. The Brooklyn Park facility, to be used for CNC machining, will be further expanded by 50,000 sq. ft. and will start commercial production by 2018-end.

In addition to the new manufacturing facility, the company invested in new equipments to its existing lot. In the United States, at least 75 CNC mills and 25 injection-molding machines were purchased in the last 12 months, while 25 CNC mills and six injection-molding machines were added in Europe.

Growth Prospects Bright

Constant innovation of products, rising usage of Internet-of-Things devices and growing demand for personalized products, especially in healthcare, retail and financial services markets, are increasing advantageous for the company. We believe that Proto Labs is uniquely positioned to leverage benefits from such favorable market trends. In addition, the company is working toward expanding its geographical footprint, adding new customers, sourcing more business from existing customers, focusing on developing new manufacturing processes and offering improvised products.

For 2018, Proto Labs anticipates revenues of $425-$450 million, representing year-over-year growth of 25-31%. Lower taxes (likely in 23-24% range) will be accretive to earnings by 30 cents per share. Largely taking this impact into account, the company anticipates its non-GAAP earnings per share to be $2.70-$2.90, higher than the earlier projection of $2.40-$2.60.

Earnings estimates for the stock increased by four brokerage firms for 2018 and by one firm for 2019 in the last 60 days. The Zacks Consensus Estimate is now pegged at $2.86 for 2018 and $3.33 for 2019, reflecting growth of 13.9% and 3.1% from the respective tallies, 60 days ago.

Proto Labs, Inc. Price and Consensus

Proto Labs, Inc. Price and Consensus | Proto Labs, Inc. Quote

Other Stocks to Consider

Here are some other stocks worth considering in the Zacks Industrial Products sector include Applied Industrial Technologies, Inc. (AIT - Free Report) , RBC Bearings Incorporated (ROLL - Free Report) and Dover Corporation (DOV - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last 60 days, earnings estimates for the three stocks have improved for the current year as well as the next year. Also, average positive earnings surprise for the last four quarters was 10.97% for Applied Industrial, 8.25% for RBC Bearings and 7.26% for Dover.

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