The 3D Printing name Stratasys (SSYS) , a member of my 2019 Triple Net Passive Portfolio (comprised of companies trading between 2x and 3x net current asset value or NCAV) has taken it's value stature one step further. It now finds itself in double-net land (companies trading at between 1x and 2x NCAV), and ended Friday trading at 1.96x NCAV.
It's been a rough year for the company and that pre-dates the pandemic. While shares currently trade around the same price as in mid-March, they are down about 45% over the past year. After three out of four much better than expected earnings releases between the second quarter of 2018, and first quarter of 2019, the company has delivered more muted results the past four quarters. That included this year's first quarter, when the company reported a 19-cent loss, well below the 4-cent loss consensus. The 14% revenue decline vs. the same quarter last year was pinned on the pandemic, and the company added more uncertainty for 2020 by withdrawing its outlook for the year. Consensus estimates - and the company is fairly well covered for its size with seven analysts weighing in - is for a full-year loss of 35 cents.
In early June, SSYS announced that it was cutting its global staff by 10%, which earned it an upgrade from J.P. Morgan from neutral to overweight, with a $22 price target. Consensus estimates for next year of 31 cents imply a forward price earnings ratio of 50, not exactly cheap, however this is a growth name, that happens to have some value attributes.
To that end, SSYS ended its latest quarter with $325 million, or about $6 per share in cash and short-term investments, and no debt. Liquidity is nice, but not always as meaningful when a company is burning cash. In SSYS's case, cash and short-term investments actually increased by $4 million between the past two quarters. While total liquidity is down by $45 million versus the first quarter of 2019, the runway appears to be fairly long at this point, and again, the company has no debt.
While 3-D printing has been one of the latest "shiny objects" over the past few years, it has not surprisingly become increasingly competitive. Still, a name in the sector such as SSYS with no debt, trading at less than 2x NCAV, and 1.27x tangible book value, at the very least is on my radar.
