Which 3D printing stock is a better buy?
The growing reliance on 3D printed products that can be modified more easily than conventionally manufactured objects has accelerated the growth of the 3D printing solutions market. The industry is expected to continue to grow with the increasing demand for bespoke and personalized products and increasing adoption by manufacturers. According to a Fortune Business Insights report, the global 3D printing market is expected to grow at a 24% CAGR by 2028. As a result, both Materialize NV (MTLS) and Stratasys Ltd. (SSYS) should benefit.
Based in Leuven, Belgium, MTLS provides additive manufacturing and medical software and 3D printing services. It works through Materialize Software; Materialize Medical; and materialize manufacturing segments. SSYS provides connected and polymer-based 3D printing solutions. It offers 3D printing systems, such as polyjet printers, FDM printers, stereolithography printing systems and programmable light-curing printers for rapid prototyping.
SSYS has gained 5.5% year-to-date (YTD) and MTLS has lost 16.8%. Which of these two stocks is a better buy now?
On November 15, 2021, MTLS agreed to exercise its option to acquire Link3D Inc., an additive workflow and digital manufacturing software company that helps customers in major manufacturing industries scale and integrate their manufacturing operations. AM in complex supply chains and IT environments. The acquisition accelerates the creation of a materialized software platform for additive manufacturing.
On December 7, 2021, SSYS introduced the newest printer in the company’s growing portfolio of 3D printing solutions for the dental industry, the Stratasys Origin One Dental. This accelerates and strengthens the expansion of additive manufacturing offerings for dental applications.
Recent financial results
Total MTLS revenue increased 28% year over year to €52.20 million ($59.20 million) for the fiscal third quarter ended September 30, 2021. The company’s adjusted EBITDA increased 62% year over year to €9.74 million ($11.05 million). ). At the same time, its net profit amounted to 8.65 million euros ($9.81 million) compared to a loss of 0.28 million euros ($0.32 million) in the quarter of the previous year. In addition, its EPS stood at €0.15 compared to a loss of €0.01 a year ago.
SSYS revenue increased 24.3% year-over-year to $159 million for the fiscal third quarter ended September 30, 2021. The company’s adjusted EBITDA increased 50% from year-over-year to reach $7.80 million, while its non-GAAP net profit reached $0.50 million, compared to a loss of $3 million in the year-ago quarter. Additionally, its non-GAAP EPS was $0.01, compared to a loss per share of $0.05 a year earlier.
Past and expected financial performance
MTLS’ book value and leveraged FCF have grown at CAGRs of 24.6% and 105.9%, respectively, over the past three years. Analysts expect MTLS revenue to grow 13.3% for the quarter ending March 31, 2022 and 12.2% for fiscal 2022. The company’s EPS is expected to rise 162.5 % for the quarter ending March 31, 2022 and 29.4% for fiscal 2022. Additionally, its EPS is expected to grow 63.1% annually over the next five years.
On the other hand, SSYS’ book value and leveraged FCF have grown at CAGRs of 8.3% and 32%, respectively, over the past three years. The company’s revenue is expected to increase 15.5% for the quarter ending March 31, 2022 and 10.6% in fiscal 2022. Its EPS is expected to increase 16.7% for the quarter ending March 31, 2022 and 233.3% in fiscal 2022. , SSYS’ EPS is expected to grow at a rate of 33% per annum over the next five years.
SSYS revenues over the last 12 months are 2.60 times higher than those generated by MTLS. However, MTLS is more profitable with an EBITDA margin and a net profit margin of 12.25% and 3.25%, respectively, compared to the negative returns of SSYS.
Moreover, the ROE, ROA and ROTC of MTLS are 3.51%, 1.56% and 1.98% compared to the negative values of SSYS.
In terms of forward EV/S, MTLS is currently trading at 4.67x, 138.3% higher than SSYS’ 1.96x. However, SSYS’ forward EV/EBITDA ratio of 58.41x is 78.4% higher than MTLS’s 32.75x.
MTLS has an overall rating of B, which is equivalent to a buy in our own POWR Rankings system. On the other hand, SSYS has an overall rating of C, which translates to Neutral. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MTLS has an A rating for growth and sentiment, in line with analysts’ expectations that its EPS will increase exponentially over the next few months. On the other hand, SSYS has a C rating for growth and sentiment, in line with analysts’ expectations that its EPS will remain negative for the quarter ending March 31, 2022.
Of the eight actions of Technology – 3D printing industry, MTLS is ranked first. In comparison, SSYS is ranked fourth.
Beyond what I said above, we also evaluated the stocks in terms of value, stability, momentum and quality. Click here to see all MTLS odds. Also get all SSYS ratings here.
The 3D printing solutions industry is expected to grow exponentially with increasing demand this year and beyond. While MTLS and SSYS should both win, I think MTLS is currently the better investment due to its lower valuation, higher profit margin and better growth prospects.
Our research shows that the odds of success increase when investing in stocks with an overall buy or strong buy rating. See All Other Highest Rated Tech Stocks – 3D Printing here.
SSYS shares remained unchanged in after-hours trading on Tuesday. Year-to-date, SSYS has gained 0.73%, versus a -9.56% rise in the benchmark S&P 500 over the same period.
About the Author: Nimesh Jaiswal
At Nimesh Jaiswal His passionate interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving the price of a stock is the key approach he follows while advising investors in his articles. Continued…