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Can Voxeljet (VJET) Spring a Surprise This Earnings Season?

Zacks Equity Research

Voxeljet AG VJET is slated to report second-quarter 2017 results on Aug 14, after the closing bell.

The company reported a negative earnings surprise of 16.7% in the last reported quarter.

Let's see how things are shaping up for this announcement.

Factors to Consider

Over the past few quarters, Voxeljet has undertaken a host of strategic and operational initiatives to drive improvement in business. These actions are starting to take hold, as evidenced by the company’s improving margin performance. We believe that improved operational execution will prove conducive to the bottom-line performance for the soon-to-be-reported quarter.

In terms of geography, we believe Germany and the U.S. will continue to act as strongest revenue churners. To further ramp up sales, the company has been moving its systems team into the new and increased production facility in Germany. Voxeljet believes that this state-of-the-art facility, which is equipped to handle demand of future machine generation, will supplement sales growth for the upcoming quarter.

Moreover, steady increase in the demand of 3D printing equipment in the U.S. and higher demand for products in China are positives. Impressive market traction of Phenolic Direct Binding process is anticipated to be one of the major catalysts for the quarter. In addition, the company’s large-scale service centers across the globe, including the recently opened subsidiaries in China and India are expected to boost growth for the second quarter and beyond.

However, on the flip side, the 3D printing industry has been battling a widespread decline in demand for enterprise 3D printers over the past two years. For quite some time now, waning demand for printers has added to the company’s concern. We expect Voxeljet’s second-quarter 2017 results to take a beating on account of slowdown in markets.

Over the past few quarters, Voxeljet has been suffering from delayed customer adoption rates, which in turn, led to a decline of order backlogs. Moreover, depressed oil prices, which have caused investment deferrals by clients, affected the company’s oil and gas extraction equipment business. This apart, Voxeljet has to contend itself with strong competition, which often results in price cuts and lower profitability.

Earnings Whispers

Our proven model does not conclusively show that Voxeljet will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 10 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Voxeljet AG Price and EPS Surprise

voxeljet AG Price and EPS Surprise | voxeljet AG Quote

Zacks Rank: Voxeljet carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 and 3 increase the predictive power of the ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Broadcom Ltd. AVGO has an Earnings ESP of +2.57% and a Zacks Rank #2.

CACI International Inc. CACI has an Earnings ESP of +1.83% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atento S.A. ATTO has an Earnings ESP of +35.71% and a Zacks Rank #2.

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