Proto Labs, Inc. (PRLB) and Materialise NV (MTLS) are two prominent players in the 3D printing industry. PRLB operates as an e-commerce driven digital manufacturer of custom prototypes and on-demand production parts. The company offers injection molding, computer numerical control machining, 3D printing, and sheet metal fabrication products. On the other hand, Belgium-based MTLS provides additive manufacturing and medical software and 3D printing services internationally. Its solutions enable healthcare, automotive, aerospace, art and design, and consumer goods industries to build 3D printing applications.
The rapid digitalization and technological advancements have bolstered the demand for 3D printing applications and devices in healthcare, automotive, aerospace, art and design, and consumer goods industries. The creation of 3D digital models using computer-aided design (CAD) or 3D scanners to conduct fruitful research and development activities also invites various corporate and government investments into this industry. Investor rising optimism in this industry is evident from the Energy Select Sector SPDR ETF’s (XLE) 9.9% gains year-to-date. The 3D printing market is expected to grow at 29.5% CAGR and reach $63.46 billion by 2026. So, both PRLB and MTLS are expected to benefit.
While MTLS lost 42.6% over the past six months, MTLS has surged 1.7%. MTLS is a clear winner with 10.3% gains versus PRLB’s negative returns in terms of its past three month’s performance. But which of these stocks is a better pick now? Let us find out.
On October 20, 2021, PRLB signed an occupancy agreement to expand its additive manufacturing footprint in Raleigh, North Carolina. This expansion is in response to the growing demand for PRLB’s 3D printing services from various applications using additive manufacturing for both prototyping and production.
On December 7, 2021, MTLS licensed Siemens AG’s (SIEGY) Parasolid software for integration with MTLS’ industry-leading software for data and build preparation, Magics. This will enable MTLS to add native CAD workflows within Magics 26, providing an additional toolset on top of mesh functionality. This powerful combination of trusted solutions will allow users to prepare for additive manufacturing processes, improve productivity and provide optimal workflow in the 3D printing industry.
Recent Financial Results
PRLB’s non-GAAP total revenue for its fiscal third quarter ended September 30, 2021, increased 9% year-over-year to $116.19 million. The company’s gross profit came in at $55.32 million, representing a 1.3% year-over-year improvement. Its non-GAAP income from operations came in at $12.74 million, indicating a 75.5% rise from the prior-year period. PRLB’s non-GAAP net income came in at $9.71 million, down 45.9% from the year-ago period. Its non-GAAP EPS decreased 47.8% year-over-year to $0.35. The company had $47.80 billion in cash and cash equivalents as of September 30, 2021.
For its fiscal third quarter, ended September 30, 2021, MTLS’ revenue increased 26.7% year-over-year to $60.44 million. The company’s gross profit came in at $35.98 million for the quarter, up 32.4% from the prior-year period. Its operating profit came in at $5.25 million, indicating a 2132.8% rise from the year-ago period. MTLS’ net income came in at $10.02 for the quarter, versus a $429,000 net loss in the year-ago period. Its EPS came in at $0.17, compared to a loss per share of $0.01 in the prior-year period. The company had $194.95 million in cash and equivalents as of September 30, 2021.
Past and Expected Financial Performance
PRLB’s EBIT and net income have decreased at CAGRs of 30.2% and 24.3%, respectively, over the past three years. The company’s tangible book value has fallen at 0.2% CAGR over the past three years.
Analysts expect PRLB’s EPS to fall 40.7% year-over-year in the current year but rise 17.1% next year. Its revenue is expected to grow 10.9% year-over-year in the current year and 8.1% next year. The company’s EPS is expected to increase at a 25% rate per annum over the next five years.
In comparison, MTLS’ EBIT and net income have grown at CAGRs of 11% and 16%, respectively, over the past three years. The company’s tangible book value has grown at 24.6% CAGR over the past three years.
MTLS’ EPS is expected to grow 241.7% year-over-year in the current year and 17.6% next year. The company’s revenue is expected to increase 9.9% year-over-year in the current year and 11.9% next year. However, analysts expect the company’s EPS to increase at a rate of 63.1% per annum over the next five years.
In terms of forward EV/Sales, MTLS is currently trading at 5.73x, 100.4% higher than PRLB’s 2.86x. In terms of trailing-12-month Price-to-Book, PRLB’s 1.77x compares with MTLS’ 5.44x.
PRLB’s trailing-12-month revenue is almost 2.1 times MTLS’. OXY is also more profitable, with a 56.9% gross profit margin versus PRLB’s 46.8%.
Furthermore, PRLB’s levered free cash flow of 8.6% compares favorably with PRLB’s 4.7%.
While MTLS has an overall B grade, which translates to Buy in our proprietary POWR Ratings system, PRLB has an overall C grade, equating to Neutral. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.
MTLS has a B grade for Growth, consistent with its impressive growth over the past year. MTLS’ EBIT increased 13,998.5% over the past year. However, PRLB’s D grade for Growth is in sync with its negative EBIT growth over the past year.
MTLS has an A grade for Sentiment, consistent with optimistic analyst estimates. MTLS’ EPS is expected to increase 500% year-over-year to $0.04 in the current year. PRLB’s D grade for Sentiment is in sync with its bleak earnings growth outlook. Analysts expect PRLB’s EPS to decline 46% year-over-year in the current year to $0.27.
Of the seven stocks in the Technology – 3D Printing industry, MTLS is ranked #1, while PRLB is ranked #3.
Beyond what we have stated above, our POWR Ratings system has also rated MTLS and PRLB for Value, Momentum, Stability, and Quality. Get all MTLS ratings here. Also, click here to see the additional POWR Ratings for PRLB.
The onset of the adoption of 3D printing and related technologies across various industries is raising investor optimism and bringing corporate investments in this industry. Both MTLS and PRLB are expected to benefit from these tailwinds. However, better analyst sentiment and higher profit margins make MTLS a better buy here.
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Technology – 3D Printing industry.
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PRLB shares were unchanged in after-hours trading Monday. Year-to-date, PRLB has declined -65.77%, versus a 29.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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