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An Investor's Guide to 3D Printing

Afrasiab Mian

3D printing is one of the many inventions that will help characterize the innovation of the 21st century. It is a process in which a physical object is made from a digital three-dimensional model. In terms of what can be created, the possibilities are as limitless as one’s imagination.

So far, 3D printing has been used for creating objects such as parts of a human skull, parts of internal organs, a rocket engine injector, and prosthetics, to name a few. It can also be used to make simpler items, such as a soap dish, screw, or a showerhead.

3D printing is still at a very early stage as an industry, with the earliest technology dating back to the late 1980s. Because it is still so new, investors may not yet know much about the companies focused in creating these products. Let’s take a look at some of players in the industry that investors can look out for moving forward.

HP Inc. HPQ

Although best-known for their computers, the Palo Alto, CA-based HP also has a rapidly growing printing division. It is the surviving entity of the split of the Hewlett-Packard Company into Hewlett Packard Enterprise Company and HP Inc.

HP announced its plans to sell two 3D printers exclusively for business customers in mid-May. Although its core sales have declined in recent years, the company has hedged its bets in its 3D printing division, and appears to be on the right track. HP’s lower end 3200 model sells for $132,000, or $155,000 with extra software, while their 4200 model can go for over $200,000.

HP INC Price and EPS Surprise

HP INC Price and EPS Surprise | HP INC Quote

HP Inc. currently sits at a Zacks Rank #3 (Hold).

3D Systems Corp. DDD

Based in Rock Hill, SC, DDD offers 3D printers, print materials, on-demand parts services, as well as digital design tools. It offers both professional and desktop 3D printers, as well as 3D scanners that can capture images and render them in 3D. Its CubePro printer retails at $4399, and targets a broader audience than HP’s current printers.

As we noted, DDD stock fell over 9% last week after a downgrade from analysts at Piper Jaffray, an investment bank and asset management firm. The downgrade was largely due to 3D printer demand falling below what was planned in the June quarter.

Still, while analysts have not revised earnings estimates for DDD, they are trending upwards over the next two years, which make it worth keeping an eye on.

3D SYSTEMS CORP Price and EPS Surprise

3D SYSTEMS CORP Price and EPS Surprise | 3D SYSTEMS CORP Quote

3D Systems currently sits at a Zacks Rank #3 (Hold).

Stratasys Ltd. SSYS

Based both in Minneapolis, MN and Rehovot, Israel, SSYS manufactures 3D printers and materials that are used by manufacturers to create models and prototypes. The company’s products are used in the aerospace, defense, automotive, medical, and business markets, amongst many others.

SSYS was downgraded alongside DDD under the same aforementioned concerns. However, like DDD it has an uptrend in earnings estimates, and has a revised estimate for this fiscal year of -$0.16 per share, up from -$0.17 60 days ago.

STRATASYS LTD Price and EPS Surprise

STRATASYS LTD Price and EPS Surprise | STRATASYS LTD Quote

Because the Zacks Rank is based on earnings estimate revisions, SSYS currently sits at a Zacks Rank #1 (Strong Buy). As our team highlighted, SSYS has notable potential upside.

ExOne Co. XONE

Based in Irwin, PA, XONE provides 3D printers and printed products to industrial customers (Noticing a trend here?). It also offers replacement services as well as training and technical support.

XONE announced on Thursday that it was recently awarded a $1.5 million three-year contract with the U.S. Middle Defense Agency (MDA), under which it will develop silicon carbide components. The company is still very small, but has a growth style score of ‘A’, reflecting its potential.

EXONE CO/THE Price and EPS Surprise

EXONE CO/THE Price and EPS Surprise | EXONE CO/THE Quote

ExOne currently sits at a Zacks Rank #3 (Hold).

Voxeljet VJET

Based in Friedberg, Germany, VJET provides 3D printers and on-demand parts services to industrial and commercial customers. The company operates in two segments, systems and services. It provides products to the aerospace, film and entertainment, art and architecture, engineering and consumer product industries.

VJET is another small company that could be threatened by HP’s entry into the industry, but has been given upward earnings estimate revisions for this fiscal year as well as the next one. Current  estimates for this year stand at a loss of $0.21 per share, up from -$0.22 60 days ago, while next year’s estimates stand at -$0.09 compared to -$0.13 60 days ago.

VOXELJET AG-ADR Price and EPS Surprise

VOXELJET AG-ADR Price and EPS Surprise | VOXELJET AG-ADR Quote

VJET currently sits at a Zacks Rank #2 (Buy).

Print ETF PRNT

The 3D printing ETF is one was created on July 18th, and is managed by Ark Investment Management LLC. As per the firm’s website, the fund seeks to “provide investment results that closely correspond, before fees and expenses, to the performance of the total 3D printing index.”

PRNT has exposure to each of the aforementioned firms with weights (in order of appearance) of 5.09%, 4.57%, 4.36%, 4.69%, and 4.93% respectively. It will be rebalanced quarterly, and has a weighted average market cap of $18 billion. PRNT has 40 holdings in total.

PRNT does not yet have a Zacks Rank.

Bottom Line

Although still a fledgling industry, the world of 3D printing still has much left to be discovered. According to McKinsey and Co, the 3D printing market could grow from $4 billion in 2014 to as high as $490 billion by 2025. Considering the massive amount of potential it has, investors should watch this industry’s movements in the years to come.

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HP INC (HPQ): Free Stock Analysis Report
 
STRATASYS LTD (SSYS): Free Stock Analysis Report
 
3D SYSTEMS CORP (DDD): Free Stock Analysis Report
 
VOXELJET AG-ADR (VJET): Free Stock Analysis Report
 
EXONE CO/THE (XONE): Free Stock Analysis Report
 
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