is slated to report its second-quarter 2014 earnings before the
market opens on Thursday, Aug. 7. The 3-D printing company's
report follows on the heels of that of fellow industry leader, 3D
reported disappointing results
If you know what analysts expect and what to focus on in a
report before earnings are announced, you'll be better prepared
to make good decisions, especially if thrown a curveball. So,
let's take a look at analysts' expectations.
Change From Year-Ago EPS
Q2 Revenue Estimate
Change From Year-Ago Revenue
2014 Revenue Estimate
$683.4 (representing 40.4% growth)
2014 Adjusted EPS Estimate
$2.20 (a 19.6% increase from 2013)
Source: Yahoo! Finance.
The consensus earnings per share estimate is unchanged from
Stratasys' EPS for the year-ago quarter. That's because Stratasys
upped its growth game earlier this year, announcing it was
planning on sacrificing short-term profits for spending on
activities aimed at fueling long-term growth and capturing market
With that said, other than the usual headliner numbers of
revenue and earnings, here's what investors should focus on in
Organic growth (growth in businesses owned for at least one year)
is a key metric for all companies, and especially important for
those that have grown significantly through acquisitions. We'd
like to see Stratasys' organic growth come in at or above what it
did in the year-ago period.
Organic growth Q2 2013: 20%
Stratasys' organic growth came in at a very strong 33% in the
, so we could get a nice positive year-over-year surprise if the
first quarter's momentum carried over into the second
Let's review Stratasys' recent acquisition history. The
company hasn't been a serial acquirer, though when it has been a
buyer, it has favored larger leader-in-class acquisitions.
Stratasys merged with Objet in 2012, which netted it Objet's
patented PolyJet technology. Notably, the first quarter of this
year marked Stratasys' return to profitability on a GAAP basis
following this megamerger.
Stratasys bought MakerBot, a popular maker of desktop 3-D
printers, in 2013. This buy gave Stratasys entry into the
consumer market, though MakerBots' products are also popular with
"prosumers" (professional consumers who use them in their small
businesses), and are also used for prototyping by engineers in
some larger companies. The MakerBot deal closed in the third
quarter of 2013, which means MakerBot sales won't be included in
Stratasys' organic growth number this quarter.
announced earlier this year that it was acquiring
two service bureaus
, Solid Concepts and Harvest Technologies. Solid Concepts is the
largest independent 3-D printing services operation in North
America, while Harvest Technologies has expertise in advanced
parts production and materials. The Solid Concepts deal closed in
mid-July; the Harvest Technologies deal is also slated to close
in the third quarter. Stratasys also announced earlier this year
that it was buying "certain assets" of Interfacial Solutions,
which is a contract provider of thermoplastics R&D and
production services. That deal was expected to close in the
None of the 2014 acquisitions will affect organic growth.
However, Stratasys could update its 2014 guidance to reflect the
expected contributions from these acquisitions.
We'd also like the gross margin, based on generally accepted
accounting principles, or GAAP, and the non-GAAP gross margin to
come in at or above what they did in the year-ago period.
GAAP gross margin Q2 2013: 47.3%
Non-GAAP or adjusted gross margin: 59.2%
I think investors can likely expect a nice increase in GAAP
gross margin. Stratasys' GAAP gross margin jumped to 51.5% from
38.4% last quarter. The company attributed this big leap to the
combining of operations and R&D from the 2012 Objet merger
being essentially complete.
Last quarter, Stratasys merely reaffirmed its previous guidance,
which seemed to disappoint investors. I wrote at that time that
it was unrealistic to expect a guidance bump up that early in the
year. However, there seems a good possibility that Stratasys will
increase 2014 revenue guidance on Thursday. CEO David Reis stated
on last quarter's conference call that the company would
reconsider its guidance once the acquisitions of Solid Concepts
and Harvest Technologies have closed -- and Solid Concepts, the
largest of the two (it generated revenue of approximately $65
million last year) has closed. However, the company could play it
safe and wait until after Harvest closes to update guidance.
Currently, Stratasys expects adjusted EPS for 2014 in the
range of $2.15-$2.25, GAAP EPS between $0.20 and $0.38, and
revenue of $660 million-$680 million. Further, Stratasys expects
organic sales, which exclude MakerBot sales, to grow at least
25%; MakerBot is expected to grow at a higher rate.
Going into earnings, the consensus estimates are for adjusted
EPS of $2.20 on revenue of $683.4 million. So, analysts are
expecting revenue to be higher than Stratasys' current guidance,
and adjusted EPS to come in at the midpoint of guidance.
Foolish final thoughts
There seems a good possibility that Stratasys will raise revenue
guidance, though raising earnings guidance is likely considerably
less of a possibility. Companies like to play it conservatively
on their projections, as they know the market will punish their
stocks for missing guidance. That said, if Stratasys' momentum
from last quarter continued into the second quarter, it does seem
possible the company will raise EPS guidance sometime this
More from The Motley Fool:
Warren Buffett Tells You How to Turn $40 into
Stratasys, Ltd. Earnings: What Can We Expect for
Q2 on Thursday?
originally appeared on Fool.com.
has no position in any stocks mentioned. The Motley Fool
recommends Stratasys. The Motley Fool owns shares of Stratasys.
Try any of our Foolish newsletter services
free for 30 days
. We Fools may not all hold the same opinions, but we all believe
considering a diverse range of insights
makes us better investors. The Motley Fool has a
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a