HOLD STRATASYS LTD SSYS
Transcription
HOLD STRATASYS LTD SSYS
November 9, 2014 NASDAQ: SSYS STRATASYS LTD BUY A+ A A- HOLD B+ B Annual Dividend Rate NA B- C+ C Annual Dividend Yield NA SELL C- D+ D D- Beta 1.24 E E- Market Capitalization $5.4 Billion Sector: Technology SSYS BUSINESS DESCRIPTION Stratasys Ltd. provides additive manufacturing (AM) solutions for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end parts. E+ Weekly Price: (US$) F HOLD 52-Week Range $85.30-$138.10 RATING SINCE 11/06/2014 Price as of 11/6/2014 $106.33 Source: S&P SMA (50) SMA (100) 1 Year 2 Years 140 130 120 110 100 STOCK PERFORMANCE (%) 3 Mo. Price Change 7.50 1 Yr. -7.02 90 3 Yr (Ann) 53.19 80 70 GROWTH (%) Last Qtr 62.07 -372.80 -287.50 12 Mo. 71.82 -0.72 22.79 3 Yr CAGR 67.62 NA NA RETURN ON EQUITY (%) SSYS Q3 2014 -1.12 Q3 2013 -1.17 Q3 2012 9.07 Ind Avg 31.93 26.16 32.65 S&P 500 14.28 13.75 13.93 Revenues Net Income EPS 60 50 Rating History BUY HOLD BUY Volume in Millions 20 10 2012 2013 0 2014 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History P/E COMPARISON RECOMMENDATION We rate STRATASYS LTD (SSYS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share. n/m 17.57 19.70 SSYS Ind Avg S&P 500 2013 Q3 -0.62 Q1 0.08 Q4 -0.07 Q3 -0.16 Q1 -0.40 Q2 -0.07 Q3 0.24 2012 Q4 -0.16 Q2 0.14 Q1 0.21 Q2 0.00 EPS ANALYSIS¹ ($) HIGHLIGHTS SSYS's very impressive revenue growth greatly exceeded the industry average of 13.8%. Since the same quarter one year prior, revenues leaped by 62.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. SSYS's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SSYS has a quick ratio of 2.44, which demonstrates the ability of the company to cover short-term liquidity needs. 44.72% is the gross profit margin for STRATASYS LTD which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SSYS's net profit margin of -15.38% significantly underperformed when compared to the industry average. 2014 NA = not available NM = not meaningful 1 Compustat fiscal year convention is used for all fundamental data items. The share price of STRATASYS LTD has not done very well: it is down 7.02% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 372.8% when compared to the same quarter one year ago, falling from -$6.63 million to -$31.33 million. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved. Report Date: November 9, 2014 PAGE 1 November 9, 2014 NASDAQ: SSYS STRATASYS LTD Sector: Technology Source: S&P Annual Dividend Rate NA Annual Dividend Yield NA PEER GROUP ANALYSIS 80% AB OR LE NTAP WDC STX Research and development spending at large manufacturers generally varies between 5% and 15% of product revenue and can be more for smaller companies and low for pure assemblers like Dell. Patent licensing is a common practice as are disputes arising from patents. Technological advancement renders products quickly outdated. Many products have a lifespan less than 18 months. R VO FA LE AB -60% UN Revenue Growth (TTM) BBRY 32.5% EBITDA Margin (TTM) Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $2.1 Billion and $22.7 Billion. Companies with NA or NM values do not appear. *EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization. 80% REVENUE GROWTH AND EARNINGS YIELD Companies with excellent process technology, capital-intensive components production and flexible high-volume assembly are expected to dominate the hardware value chain. Companies with patent capital, close links to component and equipment developers and the ability to afford research and development expenditures and capital investments will benefit the most in the future. These attributes play into the strategic and technical strengths of Japanese companies. The US industry has superior design skills, but remains largely fragmented, undercapitalized and lacks a long-term approach. However, some US companies have been successful in producing structures, strategy and operational techniques necessary for commercial success. With the global economic recovery, the computers and peripherals industry is expected to thrive as corporations continue to automate and upgrade their systems to increase efficiency and enhance competitive positions. Major players in the sector derive a substantial portion of their revenues from foreign markets adding geographic diversity to their product sales base. A weaker US dollar has given a pricing edge to American products and services. SSYS V FA AB OR LE DDD SNDK EFII NCR LXK WDC DBD STX NTAP Companies have little room for errors or inefficiencies in such a competitive and economically volatile environment. According to International Data Corp., price wars and technological evolution can drive down prices by 25% a year. Computer storage and peripherals are strong sellers as data storage continues to be a top priority across businesses. Increasing amounts of data and content and the proliferation of broadband access have necessitated greater capacity across the storage infrastructure. PEER GROUP: Computers & Peripherals UN R VO FA LE AB -60% Price as of 11/6/2014 $106.33 The US computers and peripherals industry is one of the largest global markets, including companies such as Apple (AAPL), IBM (IBM), Dell (DELL) and Hewlett-Packard (HPQ). The industry is capital-intensive with highly automated operations. Larger companies are built on purchasing power and mass production while smaller firms concentrate on product specialty and superior technology. SNDK EFII Revenue Growth (TTM) 52-Week Range $85.30-$138.10 The computers and peripherals industry includes PC equipment, handheld devices, complex information technology systems and network equipment. Technological factors such as interoperability of hardware products and compatibility with the web have brought about industry consolidation. Also, intense competition and the importance of intellectual property rights have been instrumental to growth. V FA DDD 7.5% Market Capitalization $5.4 Billion INDUSTRY ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* DBD NCR Beta 1.24 -100% BBRY 20% Earnings Yield (TTM) Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -59.7% and 71.8%. Companies with NA or NM values do not appear. Ticker SSYS BBRY NCR DDD LXK DBD WDC EFII SNDK STX NTAP Recent Company Name Price ($) STRATASYS LTD 106.33 BLACKBERRY LTD 10.27 NCR CORP 28.12 3D SYSTEMS CORP 34.91 LEXMARK INTL INC 42.28 DIEBOLD INC 35.90 WESTERN DIGITAL CORP 97.86 ELECTRONICS FOR IMAGING INC 45.50 SANDISK CORP 93.48 SEAGATE TECHNOLOGY PLC 62.53 NETAPP INC 43.17 Market Cap ($M) 5,412 5,417 4,735 3,837 2,613 2,320 22,723 2,139 20,626 20,462 13,782 This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved. Price/ Earnings NM NM 13.72 99.74 13.51 55.23 15.29 22.86 19.39 13.93 22.84 Net Sales TTM ($M) 688.10 4,051.00 6,493.00 589.80 3,700.40 3,001.22 15,269.00 776.54 6,620.31 14,020.00 6,298.10 Net Income TTM ($M) -29.41 -5,008.00 356.00 35.88 198.70 43.03 1,545.00 96.98 1,143.34 1,524.00 644.30 Report Date: November 9, 2014 PAGE 2 November 9, 2014 NASDAQ: SSYS STRATASYS LTD Sector: Technology Source: S&P Annual Dividend Rate NA Annual Dividend Yield NA Beta 1.24 Market Capitalization $5.4 Billion 52-Week Range $85.30-$138.10 Price as of 11/6/2014 $106.33 COMPANY DESCRIPTION Stratasys Ltd. provides additive manufacturing (AM) solutions for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end parts. Its AM systems utilize its patented fused deposition modeling and inkjet-based PolyJet technologies to enable the production of prototypes, tools used for production and manufactured goods directly from three-dimensional (3D) CAD files or other 3D content. The company offers desktop 3D printers for idea and design development, a range of systems for rapid prototyping, and production systems for direct digital manufacturing under the MakerBot, Mojo, uPrint, Dimension, Objet, Fortus, and SolidScape brands. It also develops, manufactures, and sells materials for use with its systems; and provides various services to its customers. In addition, the company leases or rents 3D printers and 3D production systems; and produces prototypes and end-use parts for customers from a customer-provided CAD file, as well as offers support services and warranty. Its solutions are used in architecture, automotive, aerospace and defense, electronics, medical, footwear, toys, educational institutions, government and entertainment, apparel, heavy equipment, and manufacturing industries. The company sells its products through a network of resellers and independent sales agents to individuals, smaller businesses, and large enterprises worldwide. Stratasys Ltd. was founded in 1989 and is headquartered in Eden Prairie, Minnesota. STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of SSYS shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock’s valuation. Please refer to our Valuation section on page 5 for further information. STRATASYS LTD 7665 Commerce Way Eden Prairie, MN 55344 ISR Phone: 952-937-3000 Fax: 952-937-0070 http://www.stratasys.com Solvency out of 5 stars weak Measures the solvency of the company based on several ratios. The company is more solvent than 70% of the companies we analyze. FACTOR SCORE 2.0 Growth out of 5 stars weak Measures the growth of both the company's income statement and cash flow. On this factor, SSYS has a growth score better than 30% of the stocks we rate. strong 4.0 Total Return out of 5 stars weak Measures the historical price movement of the stock. The stock performance of this company has beaten 70% of the companies we cover. strong 1.5 Efficiency out of 5 stars weak Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 20% of the companies we review. strong 3.0 Price volatility out of 5 stars weak Measures the volatility of the company's stock price historically. The stock is less volatile than 50% of the stocks we monitor. strong 4.0 strong 0.5 Income out of 5 stars weak Measures dividend yield and payouts to shareholders. This company pays no dividends. strong THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved. Report Date: November 9, 2014 PAGE 3 November 9, 2014 NASDAQ: SSYS STRATASYS LTD Sector: Technology Source: S&P Annual Dividend Rate NA Annual Dividend Yield NA Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial 0.73 2.26 E 3.00 E Q4 FY14 2014(E) 2015(E) Beta 1.24 Market Capitalization $5.4 Billion 52-Week Range $85.30-$138.10 Price as of 11/6/2014 $106.33 FINANCIAL ANALYSIS STRATASYS LTD's gross profit margin for the third quarter of its fiscal year 2014 has significantly decreased when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. STRATASYS LTD is extremely liquid. Currently, the Quick Ratio is 2.44 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow. At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 4.94% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.TheStreetRatings.com. INCOME STATEMENT Net Sales ($mil) EBITDA ($mil) EBIT ($mil) Net Income ($mil) Q3 FY14 203.61 NA -8.77 -31.33 Q3 FY13 125.63 20.20 0.91 -6.63 Q3 FY14 458.88 2,997.88 50.00 2,617.18 Q3 FY13 615.75 2,762.29 0.00 2,493.97 Q3 FY14 44.72% NA -4.31% 0.23 -0.98% -1.12% Q3 FY13 63.63% 16.07% 0.73% 0.14 -1.05% -1.17% Q3 FY14 3.20 0.02 0.00 NA Q3 FY13 6.77 0.00 0.00 NA Q3 FY14 51 0.00 -0.62 51.42 NA 1,135,424 Q3 FY13 49 0.00 -0.16 51.17 NA 1,190,622 BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) Total Debt ($mil) Equity ($mil) PROFITABILITY Gross Profit Margin EBITDA Margin Operating Margin Sales Turnover Return on Assets Return on Equity DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % Avg Daily Volume 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved. Report Date: November 9, 2014 PAGE 4 November 9, 2014 NASDAQ: SSYS STRATASYS LTD Sector: Technology Source: S&P Annual Dividend Rate NA Annual Dividend Yield NA RATINGS HISTORY Our rating for STRATASYS LTD was recently downgraded from Buy to Hold on 11/6/2014. As of 11/6/2014, the stock was trading at a price of $106.33 which is 23.0% below its 52-week high of $138.10 and 24.7% above its 52-week low of $85.30. HOLD: $106.33 HOLD: $68.16 BUY: $62.56 2 Year Chart Price/Earnings $100 2 3 Price as of 11/6/2014 $106.33 To Hold Buy Hold Buy (as of 11/6/2014) 49.24% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 29.51% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 21.25% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. 5 SSYS NM Peers 17.57 • Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings. • SSYS's P/E is negative making this valuation measure meaningless. 1 2 3 4 1 2 3 premium 5 4 5 1 2 premium 3 4 5 3 4 5 discount SSYS NA Peers 12.09 • Neutral. The P/CF ratio is the stock’s price divided by the sum of the company's cash flow from operations. It is useful for comparing companies with different capital requirements or financing structures. • Ratio not available. Price to Earnings/Growth 1 2 3 premium 4 5 discount SSYS NA Peers 0.99 • Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. • Ratio not available. Earnings Growth 1 2 3 4 lower 5 higher SSYS 22.79 Peers 33.67 • Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. • However, SSYS is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth discount SSYS 7.87 Peers 2.97 • Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. • SSYS is trading at a significant premium to its industry. 2 premium discount SSYS 2.07 Peers 4.82 • Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. • SSYS is trading at a significant discount to its peers. Price/Sales 1 Price/CashFlow discount SSYS 35.44 Peers 14.38 • Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations. • SSYS is trading at a significant premium to its peers. Price/Book RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS 4 discount premium Price reflects the closing price as of the date listed, if available Research Contact: 212-321-5381 Sales Contact: 866-321-8726 1 premium Price/Projected Earnings From Buy Hold Buy Buy 52-Week Range $85.30-$138.10 VALUATION HOLD. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or discount valuation, it simply displays that the company has negative earnings. To use another comparison, its price-to-book ratio of 2.07 indicates a discount versus the S&P 500 average of 2.72 and a significant discount versus the industry average of 4.82. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. The valuation analysis reveals that, STRATASYS LTD seems to be trading at a premium to investment alternatives within the industry. $120 2013 TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Market Capitalization $5.4 Billion $140 $80 MOST RECENT RATINGS CHANGES Date Price Action 11/6/14 $106.33 Downgrade 8/12/14 $114.24 Upgrade 3/5/13 $68.16 Downgrade 11/6/12 $62.56 No Change Beta 1.24 1 2 3 lower 4 5 higher SSYS 71.82 Peers 5.62 • Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share. • SSYS has a sales growth rate that significantly exceeds its peers. DISCLAIMER: The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved. Report Date: November 9, 2014 PAGE 5