On Monday, small cap Israeli CAD software stock Cimatron Ltd. (NASDAQ: CIMT) surged 19.03% (and continues to rise in after hours trading), apparently after a bullish Seeking Alpha article linked it to 3D printing or 3D printers, but what’s troubling is that CIMT is not really a 3D printing stock as its peers would be CAD software stocks like Autodesk, Inc. (NASDAQ: ADSK) and Dassault Systemes S.A. (OTCMKTS: DASTY).
What are CIMT, ADSK & DASTY and Why Aren’t They 3D Printing Stocks?
Lets look at what Cimatron Ltd, Autodesk and Dassault Systemes and clear up the confusion:
- Small cap Israel based Cimatron develops and distributes CAD/CAM software for the manufacturing industry and it has two major product lines: 1) GibbsCAM, which offers solutions for programming CNC machine tools; and 2) Cimatron, which is an integrated CAD/CAM solution for toolmakers and manufacturers of discrete parts. Cimatron itself caters to all manufacturing sectors and the company’s website says its ranked among the top ten CAD/CAM suppliers in every global region plus it has subsidiaries in Asia, North America and Europe while working with certified independent service providers in over 40 countries worldwide. Cimatron has a trailing P/E of 19.95 and a forward P/E of 14.19 for a fairly reasonable valuation, but its $1.25 forward dividend for a 20% yield and a 216% payout ratio looks unsustainable.
- Larger cap Autodesk calls itself a leader in 3D design, engineering and entertainment software with customers across the manufacturing, architecture, building, construction and the media and entertainment industries. Autodesk’s website says it continues to develop the broadest portfolio of state-of-the-art 3D software for global markets. Autodesk has a trailing P/E of 39.51 along with a forward P/E of 19.23 and no dividend.
- France based large cap Dassault Systemes S.A., which trades on the OTC for American investors and is a subsidiary of the conglomerate Dassault Group, is a world leader in the production of 3D design software, 3D digital mock-up and product lifecycle management (PLM) solutions. The company’s trademarks would include CATIA, SOLIDWORKS, SIMULIA, DELMIA, ENOVIA, GEOVIA, EXALEAD, NETVIBES, 3DSWYM and 3D VIA. Dassault Systemes S.A. has a trailing P/E of 39.33 along with a forward P/E of 25.50 and no apparent dividend.
Certainly all of these stocks are 3D in a sense that the software they sell would have 3D design capabilities and can obviously be used to design something that would then be produced by a 3D printer. However, to say that Cimatron Ltd along with its peers are 3D printer or 3D printing stocks is a stretch of a speculator's imagination as its like saying a plastics company which happens to produce plastic pellets for 3D printers is now a 3D printing stock.
Share Performance: Cimatron Ltd. vs. Autodesk and Dassault Systemes S.A.
On Monday, small cap Cimatron Ltd surged 19.03% to $7.38 (CIMT has a 52 week trading range of $3.01 to $12.88 a share) for a market cap of $68.94 million plus the stock is up 61.84% since the start of the year, up 100.8% over the past year and up 288.4% over the past five years albeit the stock has been particularly volatile this year. Autodesk is up 8.3% since the start of the year, up 25.8% over the past year and up 2% over the past five years while Dassault Systemes S.A. is up 19.7% since the start of the year, up 38.4% over the past year and up 121.5% over the past five years.
As you can see from the above chart, small cap Cimatron has outperformed Autodesk and Dassault Systemes S.A. over the longer term but the performance of the latter two has been more steady and consistent.
Finally, here are the latest technical charts
The Bottom Line. Let me be clear that I am not suggesting one way or the other about whether you should invest in small cap Cimatron Ltd., but don’t invest in the stock because you think it’s a 3D printer or 3D printing stock when it really isn’t. I would suggest that new investors be cautious as linking Cimatron to the 3D printer sector will probably add to its volatility.