Will Stratasys Ltd. (SSYS) Beat Earnings Estimates? - Analyst Blog

Stratasys Ltd. SSYS is set to report first-quarter 2014 results on May 9. Last quarter, the company posted a negative earnings surprise of 4.88%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Stratasys' fourth-quarter results were encouraging as it reported better-than-expected sales on the back of solid performances by its Product and Services segments.

Nonetheless, Stratasys' investments are expected to impact its operating results in the near term. Moreover, Stratasys expects second-half fiscal 2014 non-GAAP net income to be governed by the rate of adoption of its new products. Considering the evolving nature of the 3D printing market and high cost of operations, we believe much of the company's long-term profitability will depend on efficient cost management.

Furthermore, we believe that Stratasys' product launches, recent acquisitions and global expansion will help it to generate incremental sales by increasing its installed base.

To conclude, Stratasys' high-cost business model and competition from big and small players like 3D Systems Corp. DDD and Voxeljet VJET remain concerns.  

Earnings Whispers?

Our proven model does not conclusively show that Stratasys will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 33 cents. Hence, the difference is 0.00%.

Zacks Rank: Stratasys' Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here is another company you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Intuit Inc. INTU, Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).