NEW YORK (TheStreet) -- Stratasys (SSYS) is set to report its first fiscal-quarter of 2014 earnings before the market opens on Friday. Stratasys is a manufacturer of 3-D printers and was one of the hottest stocks in the bull market of 2013. However, the past couple of months have not been so kind to the high-flier growth stocks that were the darlings of last year.
Since Stratasys stock hit in a high of $131.09 in late February, shares have fallen 27% to $95.07. 3-D printing is potentially a majorly disruptive force in the way products are manufactured, but for now the market is telling us that 3-D printing stock valuations have gotten ahead of themselves.
This quarter Wall Street is expecting Stratasys's earnings to come in 4 cents lower per share than they did in the first quarter of last year while revenue grows by 49%. Seeing such robust growth in sales is exciting, but investors would really like to see higher profits as well. Here's what investors are expecting from Stratasys on Friday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus according to Zacks Investment Research is for earnings of 39 cents per share and $144.47 million in revenue. Compare that to the Estimize.com consensus from 19 hedge analysts, asset management firms, and independent analysts: 41 cents in earnings per share and a revenue estimate of $146.91 million.
Over the previous six quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Stratasys's earnings every time and has been more accurate in predicting revenue five times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.
More important, Estimize does a better job of representing the market's actual expectations, according to Deutsche Bank Quantitative Research and an independent academic study from Rice University. Stock prices tend to react more closely to the Estimize benchmark expectations than to the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case the Estimize community is expecting a slightly better report than Wall Street, but lately the market has been merciless to tech stocks with high price to earnings ratios including Stratasys.
The distribution of estimates published by analysts on the Estimize.com platform range from 37 cents to 51 cents per share in earnings and from $139.20 million to $156.77 million in revenue. This quarter we're seeing a very wide range of earnings estimates compared to previous quarters.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of EPS estimates signals less agreement in the market, which could mean greater volatility post earnings. Going into Friday's report there is a huge amount of uncertainty around Stratasys's quarterly profit.
Throughout the quarter we saw falling earnings expectations from both Wall Street and the Estimize community while revenue projections from both groups were revised upward. Surging or plummeting analyst revisions at the end of a quarter are often a leading indicator. In this case however, expectations are generally flat going into the report.
The analyst with the highest estimate confidence rating this quarter is turbinecity, which projects 40 cents earnings per share and $145.37 million in revenue. turbinecity was the Estimize Winter 2014 season champion and is ranked third overall among over 4,450 contributing analysts. In this season alone turbinecity has been more accurate than Wall Street in forecasting earnings and revenue 61% and 51% of the time respectively throughout 992 estimates.
Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity predicts that Stratasys will report between the expectations of Wall Street and the Estimize community.
Based on the findings from third party quantitative research, turbinecity?s earnings forecast is not necessarily a good sign for Stratasys. When a company beats Wall Street?s earnings consensus but fails to live up to the market?s true expectations as represented by the Estimize.com consensus, on average the stock tends to drift lower over the next three days once the market reopens rather than push higher, just like we saw recently with Tesla (TSLA).
Friday morning investors are expecting Stratasys to come up with 41 cents in earnings per share and $146.91 million in revenue. According to contributing analysts on the Estimzie.com platform tomorrow you can expect earnings per share to come in only 1 penny per share lower than last year and for year over year sales to grow by a whopping 51%.
At the time of publication the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.