NEW YORK (TheStreet) -- Three-dimensional printing stocks are tumbling on Tuesday after Stratasys (SSYS) provided mixed 2014 guidance, failing to meet Wall Street's bottom-line expectations. On the news, 3D Systems (DDD), ExOne (XONE) and Voxeljet (VJET) slipped in sympathy.
Stratasys, the second largest 3d printing stock on U.S. markets after 3D Systems, warned fiscal 2014 earnings would be lower than anticipated as expenses continue to rise.
Management forecasts net income over the fiscal year ending December between $2.15 and $2.25 a share and revenue in the range of $660 million to $680 million. Analysts surveyed by Thomson Reuters had hoped net income would be at least $2.31 a share, though revenue consensus of $658.48 million was exceeded.
The Israel-based business' profitability will likely take a hit as operating expenses are projected to expand significantly over the year. The company expects to invest heavily in sales and marketing programs and research and development into new product development.
"Projected non-GAAP net income is expected to be derived disproportionately from the second half of fiscal 2014, driven by the projected timing of operating expenses, as well as the projected timing and success of new product introductions and their corresponding ramp in sales," the company said in a statement.
In addition, Stratasys expects to rack up $50 million to $70 million in capital expenditures, particularly in manufacturing capacity in anticipation of future growth.
By early morning, shares had tanked 9.2% to $118.01.
Meanwhile, 3D Systems shed 4.5% to $87.44, Voxeljet lost 5.9% to $40.59, and ExOne was down 8.2% to $60.40.
TheStreet Ratings team rates STRATASYS LTD as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate STRATASYS LTD (SSYS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SSYS's very impressive revenue growth greatly exceeded the industry average of 2.8%. Since the same quarter one year prior, revenues leaped by 152.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SSYS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.94, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for STRATASYS LTD is rather high; currently it is at 63.63%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.27% is in-line with the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 227.8% when compared to the same quarter one year ago, falling from $5.18 million to -$6.63 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, STRATASYS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SSYS Ratings Report