Friday, 30 August 2024
by BD Banks
Stratasys (NASDAQ: SSYS) stock fell 14.9% through 12:05 p.m. on mixed earnings on Thursday.
Wall Street analysts had forecast the 3D printing company would lose $0.05 per share in the second quarter, and the good news is that Stratasys beat that estimate — losing “only” $0.04. The bad news is that Stratasys fell well short of Street forecasts for $146.3 million in Q2 sales, reporting only $138 million.
This news gets worse. The $138 million in sales that Stratasys did manage to make in the quarter represented a 14% decline year over year. The company did manage to grow consumables sales (for example, 3D printer filament) by 6%. However, in the “current macroeconomic environment,” management says sales of actual 3D printers declined significantly.
Meanwhile on the earnings front, it turns out Stratasys’ smaller-than-expected loss was not all it seems. The $0.04-per-share loss was only a non-GAAP (adjusted) number, you see. Actual earnings as calculated according to generally accepted accounting principles (GAAP) showed a $0.36-per-share loss.
Admittedly, that was better than the $0.56 per share Stratasys lost a year ago, in Q2 2023. But it’s still 9 times worse than the non-GAAP number.
Stratasys responded to the bad news by instituting “focused restructuring actions” and a “comprehensive strategic review.” As part of the restructuring, management says it’s laying off 15% of its workforce and hoping to cut operating costs by about $40 million by early 2025.
In part because of the costs associated with restructuring, Stratasys warned losses will surge in Q3 — perhaps as high as $1.50 per share. This is despite management hopes for “slightly” better Q3 revenue than was seen in Q2.
That all adds up to Stratasys probably losing as much as $2.23 per share through the first three quarters of this year — much worse than the $1.21-per-share loss Wall Street forecast for the whole of the year. With numbers like these to look forward to, it’s probably time to sell Stratasys stock.
Before you buy stock in Stratasys, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Stratasys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $769,685!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 26, 2024
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.