Is Voxeljet (VJET) Likely To Disappoint In Q4 Earnings?

Voxeljet AG (NYSE:VJET) is scheduled to report fourth-quarter 2017 results on Mar 29.

The company has a dismal earnings surprise history, having missed estimates in the trailing four quarters, recording an average negative surprise of 42.2%. The company reported a negative earnings surprise of 50% in the last reported quarter.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Over the past few quarters, Voxeljet has been suffering from a decline in order backlog on account of delayed customer adoption rates. For instance, the company’s total backlogs dropped 41% in third-quarter 2017, compared with its level at the end of 2016. Further, depressed oil prices, which have caused investment deferrals by clients, affected the company’s oil and gas extraction equipment business in the recent past. Moreover, of late, some of the company’s key customers have encountered supply chain redesign issues which may further delay investments, going forward.

The company has also been experiencing a rise in operating expenses due to higher expenses for the preparation of several financing activities, higher personnel expenses and higher expenses for materials related to various projects. These factors could be a drag on margins and is likely to put pressure on the overall bottom-line performance in the upcoming quarter as well.

On the positive side, revenues from the company’s System segment (including sales of 3D printers) showed signs of improvement in third-quarter 2017, the 3D printing industry is yet to fully stabilize. Notably, for the first nine months of 2017, the company’s System segment’s (including sales of 3D printers) revenues declined 8.9% to €8.4 million from €9.1 million in the year-ago period. These apart, other headwinds, including economic slowdown, inflation, currency fluctuations and commodity prices vagaries, have also marred the performance of most players in the industry. We expect Voxeljet’s fourth-quarter 2017 results to be adversely affected by these factors.

However, increase in the demand of 3D printing equipment in the United States and higher demand for products in China are positives. Impressive market traction of Phenolic Direct Binding process is anticipated to be one of the major catalysts for the quarter. Additionally, the company’s large-scale service centers worldwide, including the subsidiaries in China and India are expected to prove conductive for the fourth quarter and beyond.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Voxeljet this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is -21.74% as the Most Accurate estimate of a loss of 14 cents is pegged lower than the Zacks Consensus Estimate of a loss of 12 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Voxeljet has a Zacks Rank #4 (Sell). This, combined with the company’s negative ESP, makes surprise prediction difficult.

Notably, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Mellanox Technologies, Ltd. (NASDAQ:MLNX) has an Earnings ESP of +7.06% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. (NASDAQ:AMAT) has an Earnings ESP of +0.56% and a Zacks Rank #2.

Lam Research Corporation (NASDAQ:LRCX) has an Earnings ESP of +0.26 % and a Zacks Rank #2.

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