Stratasys Ltd (SSYS, Financial) has recently experienced a notable daily gain of 13.04%, complemented by a three-month gain of 20.88%. Despite these impressive figures, the company reports a Loss Per Share of $1.61. These contrasting indicators lead investors to question whether Stratasys's stock is modestly undervalued. To address this query, a detailed valuation analysis is warranted. We invite our readers to delve into the following comprehensive examination of Stratasys's intrinsic value.
Company Overview
Stratasys Ltd is at the forefront of 3D printing and additive manufacturing solutions, with its innovative fused deposition modeling and PolyJet printing technologies. With subsidiaries like MakerBot and Solidscape under its belt, Stratasys generates revenue through its 3D printing systems, services, consumables, and additive manufacturing solutions. When juxtaposing the company's stock price of $14.82 against the GF Value of $18.91, an intriguing valuation discussion emerges, suggesting a potential undervaluation of Stratasys's shares.
Understanding GF Value
The GF Value is a unique metric that determines the intrinsic value of a stock. It considers historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance projections. According to this measure, Stratasys (SSYS, Financial) is currently modestly undervalued. The GF Value Line, a representation of the stock's fair trading value, suggests that Stratasys's stock price is likely to converge towards this line over time. A price significantly below the GF Value Line indicates a stock with higher potential future returns, which is the case for Stratasys at its current price level.
Given Stratasys's relative undervaluation, the long-term return of its stock could surpass its business growth, presenting an attractive opportunity for investors.
Financial Strength Assessment
Investors must consider a company's financial strength to mitigate the risk of capital loss. Stratasys boasts a robust cash-to-debt ratio of 9.61, outperforming 78.43% of its peers in the Hardware industry. With an overall financial strength rating of 7 out of 10, Stratasys's financial health is deemed fair.
Profitability and Growth Prospects
Profitability is a critical factor for investment safety. Stratasys has had a challenging profitability history, with a negative operating margin of -14.54%, placing it lower than 83.37% of its industry counterparts. The company's profitability rank is a meager 2 out of 10, reflecting poor performance. Furthermore, the growth metrics of Stratasys are equally concerning, with a 3-year average annual revenue decline of 5.8% and a 3-year average EBITDA growth rate plummeting by 62.2%, indicating a weaker position than 97.75% of companies in the Hardware industry.
ROIC vs WACC Analysis
An evaluation of Stratasys's profitability can also be conducted by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). Stratasys's ROIC stands at -11.76%, while its WACC is 11.98%, indicating that the company is currently not generating adequate returns on its investments.
Final Thoughts
In summary, Stratasys (SSYS, Financial) presents as modestly undervalued based on the GF Value. The company's financial condition is fair, yet its profitability is weak, and its growth prospects are not favorable when compared to industry peers. Investors interested in a deeper understanding of Stratasys's financials can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
