Voxeljet (VJET) Q3 Earnings: Will It Disappoint Again?

Voxeljet AG (NYSE:VJET) is slated to report third-quarter 2016 results on Nov 10, after the closing bell.

The company failed to break its dismal earnings spell, posting a negative surprise of 100.0% in the preceding quarter. Voxeljet has an umimpressive surprise history, missing estimates each time over the trailing four quarters, with an average negative surprise of 77.0% per quarter.

Let's see how things are shaping up for this announcement.

Factors to Consider

Voxeljet’s third-quarter 2016 earnings are expected to be hurt due to a tough macroeconomic environment, which has had an adverse impact on the demand of its products. Production and delivery of the company’s printers have lead times between three and nine months from the timing of order intake to delivery. Sluggish global economy has delayed customer adoption rates, which, in turn, has led to a decline of order backlogs, thus restricting top-line growth of late.

Moreover, depressed oil prices are causing investment deferrals by clients, thus marring Voxeljet’s oil & gas extraction equipment business. Also, some of the company’s key customers are facing supply chain redesign issues which are further delaying investments, adding to its woes. This apart, currency exchange costs have proved to be a major drag in the past and may continue to weigh upon the performance of the soon-to-be-reported quarter. In addition, cutthroat competition in the 3D printing industry adds to the company’s concerns.

Lesser revenue contribution from Voxeljet UK is also likely to play a spoilsport during third-quarter 2016. Concurrent with its second-quarter earnings release, Voxeljet slashed its full-year revenue guidance from €28–€30 billion to €24–€25 billion, to reflect the worsening macroeconomic conditions. Further, escalating operating expenses, which have hurt the company’s financial performance in the past, are most likely to do so for the to-be-reported quarter.

Despite these challenges, Voxeljet’s third-quarter top line is expected to benefit from strong Services’ revenue growth. Capacity expansion at the facility in Friedberg, Germany has led to an increase in the volume and the number of shipped parts over the past couple of quarters, driving revenues for the segment. Also – Voxeljet America – which has acted as a catalyst since it commenced operations in 2015, is expected to drive overall revenues for the third quarter.

In addition, the company’s large scale service centers across the globe, including the recently opened subsidiaries in China and India are expected to boost growth for the third quarter and beyond. Impressive market traction of Phenolic Direct Binding process is anticipated to be one of the major profit churners for the quarter. Cost savings from the restructuring actions implemented earlier, are also likely to be conducive to the company’s third-quarter financials.

Earnings Whispers

Our proven model does not conclusively show that Voxeljet will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at a loss of 9 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

Zacks Rank: The stock currently carries a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

SITO Mobile, Ltd. (NASDAQ:SITO) with an Earnings ESP of +100.0% and a Zacks Rank #1. The company will report third-quarter 2016 results on Nov 14 after the closing bell. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corp. (NASDAQ:NVDA) with an Earnings ESP of +1.79% and a Zacks Rank #1. The company will report third-quarter fiscal 2017 results on Nov 10 after the closing bell.

Evolent Health, Inc. (NYSE:EVH) with an Earnings ESP of +7.69% and a Zacks Rank #2. The company will report third-quarter 2016 results on Nov 9 after the closing bell.

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