The outsourcing of 3D printing and its increased adoption in various sectors are expected to drive the growth of the 3D printing industry. However, one of the major concerns hindering the adoption and implementation of 3D printing is the need for a high initial investment to purchase materials and equipment.
While quality 3D printing stocks Stratasys Ltd. (SSYS), Proto Labs, Inc. (PRLB), and Materialise NV (MTLS) might be ideal buys, fundamentally weak Shapeways Holdings, Inc. (SHPW) might be best avoided.
The 3D printing market is expected to flourish thanks to the strong presence of key market players, increased demand from end-use industries, and more people using advanced technologies.
Moreover, industries such as aerospace and automotive are increasingly utilizing 3D printing. As a result, the global 3D Printing market is projected to grow at a CAGR of 23.3% to reach $34.8 billion by 2030.
Moreover, the rise in 3D printing outsourcing is another factor supporting the market growth.
In addition to the positive growth drivers, the 3D printing market also faces certain challenges that could impede its expansion. Machine limitations, material restrictions, and concerns regarding intellectual property rights are expected to act as partial constraints on market growth. Furthermore, a shortage of skilled labor poses a significant hurdle in unlocking the full potential of the technology.
Also, materials used in commercial and industrial printers are expensive compared to those used in traditional construction processes.
Stocks to Buy:
Stratasys Ltd. (SSYS)
SSYS provides connected polymer-based 3D printing solutions. It offers a range of 3D printing systems, Fused Deposition Modeling (FDM) printers, stereolithography printing systems, origin P3 printers, and SAF printers for manufacturing, tooling, rapid prototyping, and various vertical markets.
SSYS’ trailing-12-month cash per share of 3.07x is 74.9% higher than the 1.76x industry average.
SSYS’ net sales came in at $149.38 million in the fiscal first quarter that ended March 31, 2023. The company’s non-GAAP gross profit came in at $70.69 million. Also, its operating expenses declined 7.9% year-over-year to $82.19 million.
Analysts expect SSYS’s revenue to be $154.26 million in the current fiscal second quarter ending June 2023. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 29.4% over the past six months to close its last trading session at $16.62.
SSYS’ POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SSYS also has a B grade for Growth and Momentum. It is ranked first out of seven stocks in the Technology - 3D Printing industry.
Beyond what is stated above, we’ve also rated SSYS for Value, Quality, Sentiment, and Stability. Get all SSYS ratings here.
Proto Labs, Inc. (PRLB)
PRLB operates as a digital e-commerce manufacturer of custom prototypes and on-demand production parts worldwide.
On March 30, 2023, PRLB significantly expanded its manufacturing capabilities and pricing options available to designers, engineers, and buyers worldwide.
By leveraging the company’s digital network of manufacturers at Hubs, customers can access advanced capabilities, reduce part costs, and increase part quantities across CNC machining, injection molding, and 3D printing services. The expansion complements the low-volume, on-demand manufacturing services already available from PRLB.
PRLB trailing-12-month gross profit margin of 43.55% is 46% higher than the 29.83% industry average. Its trailing-12-month cash per share of 2.37x is 17.6% higher than the 2.01x industry average
PRLB’s total revenue rose 7.1% year-over-year to $125.86 million in the fiscal first quarter that ended March 31, 2023. The company’s non-GAAP EBITDA came in at $17.77 million. Also, its net income per share came in at $0.10, and its net income came in at $2.66 million.
Street expects EPS estimate to be $0.30 for the current fiscal second quarter (ending June 2023). Its revenue estimate for the same quarter is $123.12 million. Additionally, PRLB has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 35% over the past six months to close the last trading session at $34.05.
PRLB’s robust prospect is reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
PRLB has a B grade for Quality, Growth, and Momentum. It is ranked #2 in the same industry.
Click here for the additional POWR Ratings for PRLB (Value, Stability, and Sentiment).
Materialise NV (MTLS)
Headquartered in Leuven, Belgium, MTLS provides additive manufacturing and medical software, and 3D printing services in the Americas, Europe and Africa, and the Asia-Pacific. The company operates through three segments: Materialise Software; Materialise Medical; and Materialise Manufacturing.
On May 30, 2023, MTLS and Vuzix Corporation (VUZI), a leading supplier of Smart Glasses and Augmented Reality technology and products, announced a collaborative effort to accelerate the design and production of smart eyewear using 3D printing technology.
By integrating 3D printing into the manufacturing process, Vuzix and MTLS aim to accelerate the development of innovations for enterprise applications, from warehouses to operating rooms.
Its trailing-12-month gross profit margin of 55.82% is 14% higher than the 48.99% industry average. Its trailing-12-month cash per share of 2.60x is 48.2% higher than the 1.76x industry average.
MTLS’s revenue increased 24.4% year-over-year to €65.89 million ($71.65 million) in the fiscal first quarter that ended March 31, 2023. The company’s gross profit increased 27.5% year-over-year to €36.84 million ($40.06 million). Also, its adjusted EBITDA increased 89.4% year-over-year to €10.31 million ($11.03 million).
The stock gained 13.7% over the past three months to close its last trading session at $9.95.
MTLS’s POWR Ratings reflect its positive outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
MTLS also has an A grade for Sentiment and a B for Growth and Value. It is ranked first in the same industry.
In addition to the POWR Ratings highlighted above, one can access MTLS’ ratings for Quality, Stability, and Momentum here.
Stock to Sell:
Shapeways Holdings, Inc. (SHPW)
SHPW facilitates the design, manufacture, and sale of 3D-printed products in the United States, Europe, and internationally.
SHPW’s trailing-12-month asset turnover ratio of 0.42x is 47.9% lower than the 0.80x industry average. Its trailing-12-month cash per share of 0.26x is 87.2% lower than the 2.01x industry average.
SHPW’s net revenue came in at $8.20 million in the fiscal first quarter that ended March 31, 2023. Its gross profit declined 3.7% year-over-year to $3.28 million in the same quarter. The company’s net loss increased 83.4% year-over-year to $7.40 million, and net loss per share increased 75% year-over-year to $0.14.
Analysts expect SHPW’s revenue to decline marginally year-over-year to $8.38 million in the fiscal second quarter ending June 2023. Its EPS is expected to decline 45.7 % year-over-year to negative $0.14 for the same quarter. The company has failed to surpass the consensus revenue estimates in three of the trailing four quarters, which is disappointing.
The stock has declined 69% over the past year, closing the last trading session at $0.48.
SHPW’s grim prospects are reflected in its POWR Ratings. The stock has an overall D rating, translating to a Sell in our POWR Rating system.
SHPW has an F grade for Quality and a D in Stability. It is ranked #4 in the same industry.
To see the additional POWR Rating for Growth, Value, Sentiment, and Momentum for SHPW, click here.
What To Do Next?
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SSYS shares were trading at $16.82 per share on Wednesday morning, up $0.20 (+1.20%). Year-to-date, SSYS has gained 41.82%, versus a 12.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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