Materialise NV (MTLS), and Nano Dimension Ltd. (NNDM) are two prominent players in the 3D printing industry. Belgium-based MTLS provides additive manufacturing and medical software and 3D printing services internationally. Its solutions enable healthcare, automotive, aerospace, art and design, and consumer goods industries to build 3D printing applications. In comparison, NNDM is an Israel-based additive electronics provider. With its 3D printing technology for printed electronics, the company targets the growing demand for electronic devices requiring sophisticated features and relying on encapsulated sensors, antennas, and printed circuit boards (PCBs). It also provides nanotechnology-based conductive and dielectric inks; and DragonFly and Switch software to manage the design file and printing process. It serves defense, automotive, consumer electronics, semiconductor, aerospace, medical industries, and research institutes.
Over the past few years, rapid digitalization and technological advancements have increased the demand for 3D printing. Advanced research and development of cost-efficient, quick 3D prototypes in various shapes and sizes to study models before proceeding to full-scale production has gained popularity in healthcare, automotive, aerospace, art and design, and consumer goods industries. Increasing corporate investments and product breakthroughs in this industry should keep driving its growth. The global 3D printing market is expected to grow at a 24.1% CAGR to $57.10 billion by 2027. So, both NNDM and MTLS should benefit.
MTLS is a winner with 10.2% gains over the past week versus NNDM’s 7.1% gains. But which of these stocks is a better pick now? Let’s find out.
Latest Developments
On December 7, 2021, MTLS licensed Siemens AG’s (SIEGY) Parasolid software to integrate MTLS’ industry-leading software Magics. This move should enable MTLS to add native CAD workflows within Magics 26, providing an additional toolset on top of mesh functionality. This powerful combination of trusted solutions will allow users to prepare for additive manufacturing processes, improve productivity and provide optimal workflow in the 3D printing industry.
On January 24, 2022, NNDM collaborated with leading global printed circuit board (PCB) manufacturer TTM Technologies, Inc. (TTMI) to open its first AME NanoLab at TTMI’s Advanced Manufacturing Center in Stafford Springs, Connecticut. The alliance will draw upon TTMI’s expertise in the PCB industry and deliver innovations and solutions using advanced composition and manufacturing techniques. The AME NanoLab Network will allow clients to utilize NNDM’s latest DragonFly IV 3D-Printer and FLIGHT software. This should allow NNDM and TTMI to drive growth and new capabilities in the AME market.
Recent Financial Results
For its fiscal 2021 fourth quarter ended December 31, 2021, MTLS’ revenue increased 25.8% year-over-year to $64.55 million. The company’s gross profit came in at $37.60 million, representing a 26.9% rise from the prior-year period. Its operating profit came in at $5.64 million, compared to a $2.42 million loss in the prior-year period. MTLS’ net profit came in at $5.40 million, versus a $2.60 million loss in the year-ago period. Its EPS came in at $0.09, compared to a loss per share of $0.05 in the year-ago period. The company had €196.03 million ($215.66 million) in cash and cash equivalents as of December 31, 2021.
NNDM’s revenues for its fiscal 2021 third quarter ended September 30, 2021, increased 205.9% year-over-year to $1.34 billion. The company’s gross profit came in at $363,000, compared to a loss of $56,000 in the prior-year period. Its operating income came in at $24.51 million, indicating a 23.2% year-over-year rise. NNDM’s net loss came in at $18.26 million, down 11.9% from the year-ago period. Its loss per share decreased 5.4% year-over-year to $0.07. As of September 30, 2021, the company had $1.13 billion in cash and cash equivalents.
Past and Expected Financial Performance
MTLS’ revenue, tangible book value, and total assets have increased at CAGRs of 3.6%, 25.5%, and 9.7%, respectively, over the past three years.
MTLS’ EPS is expected to grow 241.7% year-over-year in fiscal 2022, ending December 31, 2022. Its revenue is expected to grow 10.1% year-over-year in fiscal 2022.
NNDM’s revenue, tangible book value, and total assets have increased at CAGRs of 9%, 324.7%, and 300.5%, respectively, over the past three years.
Analysts expect NNDM’s EPS to remain negative in its fiscal year 2022, ending December 31, 2022. Its revenue is expected to increase 254.5% year-over-year in fiscal 2022.
Valuation
In terms of non-GAAP P/E for the next fiscal year, MTLS is currently trading at 84.98x, compared to NNDM’s negative 10.81x. In terms of trailing-12-month Price/Sales, MTLS’ 4.91x compares with NNDM’s 142.75x.
Profitability
MTLS’ trailing-12-month revenue is almost 47.4 times NNDM’s. MTLS is also more profitable, with a 7.2% ROE versus NNDM’s negative value.
Furthermore, MTLS’ ROA and ROTC of 2.1% and 2.6% compare with NNDM’s negative values.
POWR Ratings
While MTLS has an overall B grade, which translates to Buy in our proprietary POWR Ratings system, NNDM has an overall D grade, equating to Sell. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.
In terms of Momentum, both MTLS and NNDM have been graded a C, reflecting their mixed price gains over the past year.
MTLS has a B grade for Sentiment, consistent with analysts’ expectations of a solid increase in earnings. MTLS’ EPS is expected to grow 241.7% year-over-year to $0.17 for fiscal 2022, ending December 31, 2022. NNDM’s C grade for Sentiment is in sync with its analysts’ negative EPS estimate for fiscal 2022, ending December 31, 2022.
Of the eight stocks in the Technology - 3D Printing industry, MTLS is ranked #1, while NNDM is ranked #6.
Beyond what we have stated above, our POWR Ratings system has also rated MTLS and NNDM for Stability, Sentiment, Growth, and Value. Get all MTLS ratings here. Also, click here to see the additional POWR Ratings for NNDM.
The Winner
Both NNDM and MTLS should benefit from the growing interest and substantial investments in the rapidly growing 3D printing industry. However, higher profitability makes MTLS a better buy here.
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Technology - 3D Printing industry.
MTLS shares were unchanged in after-hours trading Thursday. Year-to-date, MTLS has declined -13.53%, versus a -7.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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