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It has been about a month since the last earnings report for Stratasys, Ltd. SSYS. Shares have added about 5.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is SSYS 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 Q1 Earnings and Revenues Lag Estimates
Stratasys reported disappointing results for first-quarter 2018, wherein both the top and bottom-line figures fell short of the Zacks Consensus Estimate.
In the quarter under review, the company’s non-GAAP earnings per share came in at 5 cents, which missed the Zacks Consensus Estimate of 8 cents per share. The figure however, was in-line with the year-ago quarter’s earnings.
Stratasys’ revenues of $153.8 million missed the Zacks Consensus Estimate of $167 million. Also, on a year-over-year basis, the figure declined 5.7%.
The decline in revenues was primarily due to disappointing decline in sales of high end products in North America. Sluggish demand from government and other key vertical customers like aerospace and automotive resulted in the lower-than-expected sales.
Segment wise, Product revenues were down 9.7% from the year-ago quarter to $103.9 million. Within product revenues, system revenues dropped 20.7% due to lower sales of high-end products in North America.
Revenues from Services increased 3.8% year over year to $49.9 million. The increase in Services revenues was primarily attributed to 7.3% year-over-year increase in support revenues that include revenues generated mainly through maintenance contracts. The growth in installed base of systems and improvement in service contract attach rate led to improved revenues.
Stratasys’ non-GAAP gross margin expanded 160 basis points (bps) to 52.8%.
Non-GAAP operating income totaled $4.9 million, compared with $4 million in the year-ago quarter. Operating margin was 3.2% compared with 2.5% in the prior-year quarter.
The company exited the quarter with cash and cash equivalents of $346.5 million compared with $328.8 million at the end of the previous quarter. Inventories came in at approximately $120.1 million compared with $115.7 million last quarter. As of Mar 31, 2017, long-term debt came in at $25.9 million.
Stratasys reiterated guidance for full-year 2018. The company envisions revenues 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 band. Capital expenditures are estimated to lie within the $40-$50 million range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.
Stratasys, Ltd. Price and Consensus
Stratasys, Ltd. Price and Consensus | Stratasys, Ltd. Quote
At this time, SSYS has an average Growth Score of C and a grade with the same score on the momentum front. The stock was also allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, SSYS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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