Products & Partnerships To Aid Stratasys' (SSYS) Q4 Earnings

Stratasys Ltd. (NASDAQ:SSYS) is scheduled to report fourth-quarter 2017 results on Feb 28. In the trailing four quarters, the company topped earnings estimates, delivering an average beat of approximately 117%.

Before we discuss the factors likely to influence the forthcoming results, let’s take a look at how the company performed in the last quarter.

The company reported mixed results for third-quarter 2017, wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. Although revenues declined marginally, earnings improved significantly on a year-over-year basis. The year-over-year improvement in the bottom line was mainly driven by the company’s consistent focus on reducing operating expenses, partially offset by lower revenues.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Stratasys, a manufacturer of 3D printers and in-office rapid prototyping (RP) and manufacturing systems, looks well poised on the back of product launches and strategic partnerships. These initiatives are paving the way for the company to excel in the 3D printing industry, which is anticipated to witness CAGR of 25.76% from 2017 to 2023 and reach $32.78 billion.

Notably, during the quarter, the company announced that Skorpion Engineering has accelerated the development of prototypes of luxury cars by around 50% with the help of Stratasys’ additive technology solutions. The company also announced the launch of BioMimics for 3D printing of medical models. This will address the needs of hospitals, manufacturers of medical devices as well as researchers.

The company also entered into a collaboration with e-Xstream Engineering, per which the latter will be delivering “process modeling and structural analysis numerical tools” to Stratasys, which will in turn be beneficial for the betterment of the company’s solutions and hence the top line.

The company’s strategic partnerships with Schneider Electric (PA:SCHN), The Boeing (NYSE:BA) Co., Ford Motor (NYSE:F) Co., Siemens, Boom Supersonic and United Launch Alliance have expanded its geographic reach and market penetration. Its clientele, which includes the likes of Airbus and Koninklijke Philips N.V, is an additional positive. We believe an increase in its client base to aid fourth-quarter 2017 revenue growth.

Furthermore, Stratasys has also taken measures to improve margins. It recorded operating margin of 5.2% in the third quarter compared with 2.1% reported in the year-ago quarter.

We believe that the company’s consistent focus on reducing operating expenses will also drive results in the soon-to-be-reported quarter.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Stratasys has a Zacks Rank #3 and an Earnings ESP of +7.21%. This indicates that the company is likely to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 16 cents per share, while revenues are estimated to be around $174.5 million.

Other Stocks With a Favorable Combination

Here are some companies you may also want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Vmware, Inc. (NYSE:VMW) has an Earnings ESP of +0.28% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Autodesk, Inc. (NASDAQ:ADSK) has an Earnings ESP of +17.98% and a Zacks Rank #3.

Salesforce.com Inc. (NYSE:CRM) has an Earnings ESP of +1.51% and a Zacks Rank #3.

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