Q1 Rundown: 3D Systems (NYSE:DDD) Vs Other Custom Parts Manufacturing Stocks
Wrapping up Q1 earnings, we look at the numbers and key takeaways for the custom parts manufacturing stocks, including 3D Systems (NYSE:DDD) and its peers.
Onshoring and inventory management–themes that grew in focus after COVID wreaked havoc on global supply chains–are tailwinds for companies that combine economies of scale with reliable service. Many in the space have adopted 3D printing to efficiently address the need for bespoke parts and components, but all companies are still at the whim of economic cycles. For example, consumer spending and interest rates can greatly impact the industrial production that drives demand for these companies’ offerings.
The 5 custom parts manufacturing stocks we track reported a softer Q1. As a group, revenues missed analysts’ consensus estimates by 4.8% while next quarter’s revenue guidance was 6.7% below.
Luckily, custom parts manufacturing stocks have performed well with share prices up 16.2% on average since the latest earnings results.
3D Systems (NYSE:DDD)
Founded by the inventor of stereolithography, 3D Systems (NYSE:DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.
3D Systems reported revenues of $102.9 million, down 15.1% year on year. This print fell short of analysts’ expectations by 3.5%. Overall, it was a disappointing quarter for the company with a miss of analysts’ operating margin estimates.
Commenting on second quarter results, Dr. Jeffrey Graves, president and CEO of 3D Systems said, “We are encouraged by the sequential revenue progress we delivered during the second quarter despite a challenging operating environment.”
3D Systems Total Revenue
Interestingly, the stock is up 37.8% since reporting and currently trades at $3.22.
Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.
Proto Labs reported revenues of $125.6 million, up 2.8% year on year, in line with analysts’ expectations. The business performed better than its peers, but it was unfortunately a mixed quarter with a decent beat of analysts’ EBITDA estimates but revenue guidance for next quarter missing analysts’ expectations.
Proto Labs Total Revenue
Proto Labs achieved the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 18.2% since reporting. It currently trades at $27.40.
Originating from a research lab at MIT, Desktop Metal (NYSE:DM) offers 3D printers, production materials, and software to many industries.
Desktop Metal reported revenues of $38.93 million, down 26.9% year on year, falling short of analysts’ expectations by 14.4%. It was a disappointing quarter as it posted a miss of analysts’ EBITDA and earnings estimates.
Desktop Metal delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is flat since the results and currently trades at $4.92.
Beginning as a start-up at SolidWorks World–an annual design and engineering conference, Markforged (NYSE:MKFG) offers 3D printers and softwares to manufacturers of various industries.
Markforged reported revenues of $21.69 million, down 14.8% year on year. This number met analysts’ expectations. Zooming out, it was a slower quarter as it logged full-year revenue guidance missing analysts’ expectations.
Markforged achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 65.6% since reporting and currently trades at $4.47.
Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.
Stratasys reported revenues of $138 million, down 13.6% year on year. This print came in 5.7% below analysts' expectations. It was a disappointing quarter as it also produced underwhelming earnings guidance for the full year.
Stratasys had the weakest full-year guidance update among its peers. The stock is down 3.3% since reporting and currently trades at $7.43.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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