A month has gone by since the last earnings report for Stratasys (SSYS - Free Report) . Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stratasys 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 drivers.
Stratasys reported second-quarter 2018 earnings of 15 cents per share, which topped the Zacks Consensus Estimate of 8 cents. However, the figure was lower than the year-ago figure of 17 cents per share.
Stratasys’ revenues of $170.2 million beat the Zacks Consensus Estimate of $169 million. Also, on a year-over-year basis, the figure increased 0.12%.
Notably, revenues also improved sequentially, driven by a recovery in sales of high-end products, and improvement in demand from government and other key vertical customers like aerospace and automotive, in North America.
Segment wise, Products revenues were down 2.2% from the year-ago quarter to $118.4 million. Within Products revenues, system revenues fell 8.2%. Consumable revenues rallied 4.8%, driven by strong utilization of installed base of systems.
Revenues from Services increased 5.8% year over year to $51.8 million. The rise was primarily attributed to considerable growth in customer support revenues and significant improvement in performance at Stratasys Direct Manufacturing.
Stratasys continued to show its leadership in additive manufacturing by introducing new products that witnessed a strong response, including satisfactory number of Fortus 900 Pro and Fortus 900 Aircraft Interiors Certificate Solution, installed globally.
Furthermore, additional installations of the J700 Dental 3D Printer at dental labs translated into incremental unit sales to customers' installed base and steady recurring revenues from consumables.
Stratasys’ non-GAAP gross profit declined 0.9% from the year-ago period to $89.4 million. Moreover, non-GAAP gross margin fell 50 basis points (bps) on a year-over-year basis to 52.5% due to product mix.
Non-GAAP operating income totaled $10.6 million, down 4.5% from the year-ago quarter. Operating margin declined 30 bps to 6.2%. Increasing investments in research and development initiatives is an overhang.
Balance Sheet and Cash Flow
The company exited the quarter with cash and cash equivalents of $346.7 million compared with $346.5 million at the end of the previous quarter.. As of Jun 30, 2018, long-term debt came in at $24.6 million.
Net cash provided by operating activities in the quarter was $13 million.
For full-year 2018, the company reiterated revenue guidance in the range of $670-$700 million.
Non-GAAP earnings per share are projected between 30 cents and 50 cents.
Furthermore, the company anticipates non-GAAP operating margin to be in the 4.5-6% band.
Capital expenditures are estimated to lie within $30 million to $40 million, lower than the previously projected range of $40-$50 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -122.22% due to these changes.
At this time, Stratasys has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, 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 D. 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 momentum based on our style scores.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stratasys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.