Investors who got into 3D printer stocks like Stratasys, Ltd. (NASDAQ: SSYS) and 3D Systems Corporation (NYSE: DDD) at an early stage before all the hype around 3D printing set in have been well rewarded, but small cap 3D printing service provider Proto Labs Inc (NYSE: PRLB) has quietly been producing great returns for investors as well – despite the fact that both SSYS and DDD have come been coming back down to earth since the start of the year. So might Proto Labs be a better investment in 3D printing?
What is Proto Labs Inc?
Founded in 1999 as The Protomold Company, Inc., Proto Labs was specialized in quick-turn manufacturing of custom plastic injection molded parts. Today, Proto Labs calls itself the world’s fastest provider of CNC machined and injection molded parts as its Firstcut (CNC machining in 1 to 3 days) and Protomold (injection molding in 1 to 15 days) services utilize proprietary computing technologies and automated manufacturing systems to make both prototype and short-run production parts. More specifically, Proto Labs provides new product designers with the easiest, fastest and least-expensive way to obtain low volumes of parts based on their 3D CAD design.
It should be mentioned that most of Proto Labs’ business comes from customers over the Internet who upload 3D CAD files to the company’s website which then analyzes the customer’s needs and provides a price quote. The website can even provide suggestions on design modifications and better manufacturing approaches.
What’s Good About Proto Labs Inc?
Proto Labs IPO’d on February 24, 2012 at $16 a share and closed at the $29 level on its first day of trading. The company would go on to be one of the best performing IPOs of 2012.
Last March, it was reported that Proto Labs was planning to make its first acquisition in its 14 years of existence in order to to add to its manufacturing knowhow. Proto Labs also intends to maintain 25% top line growth while annual revenue has grown almost threefold over the past five years. In addition and over the last three years, Proto Labs has produced rising net income of $24,025k (2012), $17,972k (2011) and $10,951k (2010).
It should be noted that during the IPO roadshow, questions regarding barriers to entry were apparently common, but executives at Proto Labs would point out that the company has over 13 years of experience working directly with customers to make the system they have better and software engineers work right next door to the manufacturing facility. In addition, their process can make injection molded parts overnight at a 60%+ gross margins while competitors (traditional injection molding shops) will take three months to make the same parts (and it costs them more to do it).
Finally and on the valuation side of things, it should be mentioned that Proto Labs has a trailing P/E of 47.78 verses Stratasys, Ltd.’s P/E of 189.81 and 3D Systems Corporation’s P/E of 66.49 along with a forward P/E of 28.72 verses 28.35 and 24.38, respectively, for SSYS and DDD.
Proto Labs Inc Stock Performance Verses SSYS and DDD
On Monday, Proto Labs rose 1.23% to $46.82 (PRLB has a 52 week trading range of $24.90 to $53.91 a share) for a market cap of $1.14 billion plus the stock is up 18.8% since the start of the year, up 45.6% over the past year and up 61.4% since last March. In comparison, Stratasys, Ltd. is down 14.7% since the start of the year, up 97.8% over the past year and up 265.5% over the past five years while 3D Systems Corporation is down 11.6% since the start of the year, up 93.9% over the past year and up 167.4% since May 2011. Here is a quick visual comparison of the performance of all three stocks:
For traders who are chart technicians, here is a quick look at Proto Labs’ recent chart performance along with the recent technical charts for Stratasys, Ltd. and 3D Systems Corporation:
The Bottom Line. If you aren’t already in a 3D printer or related 3D printing stock and you aren’t turned off by valuations in the sector, Proto Labs could be a better option than both Stratasys, Ltd. and 3D Systems Corporation and would definitely be worth a closer look.