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Stratasys Earnings: Will Kathy Wood’s Stock Dump Timing Prove Smart?

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Stratasys (SSYS 0.00%) is set to report its second quarter results before the market opens on August 3. At this point, it appears that the 3D printing company’s report will precede the rival’s report. 3D SystemsWhich has not yet announced the date of its next earnings release.

Investors are probably taking Stratasys’ upcoming report with some equal dose of optimism and caution. On the positive side, the company has made good progress in improving its results after the first phases of the pandemic, which has hurt its sales to the industrial sector significantly. In addition, it easily beat analysts’ consensus estimates for both revenue and earnings last quarter. It pleased investors enough to send their shares up 11.6%.

However, warning signs that the US economy could be headed for a recession this year or next have intensified. Therefore investors are probably concerned about the impact that the challenging macroeconomic environment could have on Stratasys’ results on the short and medium terms. So the company’s guidance should be even more important than usual this time around.

Additionally, some investors are probably concerned that Ark Invest CEO Cathy Wood massively dumped Stratasys stock from its exchange-traded fund (ETF) in early July. Granted, Wood’s hand has been icy lately, but she has lashed out at other fund managers during the earlier stages of the pandemic and remains worth following.

On July 5, Woods Arch Innovation ETF Sold 1.8 million shares of Stratasys. As of July 14, he holds less than 124,000 shares of Stratasys, which is only 0.02% of the fund’s value. Not surprisingly, Stratasys stock fell after Ark’s massive sell-off was revealed on July 6, losing 14.8% of its value.

With this background in mind, here’s what investors should be looking for in Stratasys’ second-quarter report.

Image Source: Getty Images.

Stratasys’ Prime Numbers

Below are Wall Street’s consensus estimates for the recently completed quarter and company results from the prior-year period.

metric Q2 2021 Results Analysts’ Q2 2022 Consensus Estimates estimated change
revenue $147.0 million $166.3 million 13%
Adjusted Earnings Per Share (EPS) ($0.02) ($0.01) Damage estimated to be 50% less

Data Sources: Stratasys and Yahoo! finance.

For Q2, Stratasys guided for a percentage of year-over-year revenue growth in the low-to-mid teens. Management did not provide guidance on earnings for the quarter.

For context, in the first quarter, Stratasys’ revenue rose 22% year over year to $163.4 million, surpassing Wall Street’s $157.6 million and beating the company’s guidance for a growth percentage in the high teens. This growth was driven by the company’s products segment, where sales grew 25%; Sales of its services segment grew just 15%. In the products business, 3D printer revenue grew 37% and print materials revenue grew 16%. This was the company’s best first quarter in terms of 3D printer sales in the past six years. This bodes well for future sales of print materials as sales of machines outpace material sales, which sport higher margins.

Last quarter’s adjusted net income was $1.2 million, or $0.02 per share, up from an adjusted net loss of $0.06 per share in the year-ago period. The result well beat the adjusted loss of $0.04 per share that analysts had predicted.

Advice

Any notable changes to the company’s 2022 guidance will likely propel the stock.

For the year, Stratasys’ current outlook is for revenue in the range of $685 million to $695 million, which would equate to growth of approximately 13% to 15%. Management also expects adjusted earnings per share in the range of $0.14 to $0.19. In 2021, the company had an adjusted loss of $0.07 per share.

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