Voxeljet (VJET): What's Ahead For The Stock In Q2 Earnings?

Voxeljet AG (NYSE:VJET) is slated to report second-quarter 2016 results on Aug 11, after the closing bell.

In the preceding quarter, the company disappointed investors by posting a negative earnings surprise of 125.0%, marking a hat trick of negative surprises. The company has a dismal surprise history, missing estimates in three out of the trailing four quarters, the average being 46.1% per quarter.

Let's see how things are shaping up for this announcement.

Factors to Consider

Voxeljet’s key strengths include strategic international extension, impressive market traction of existing products and introduction of innovative ones. The company’s new Phenolic Direct Binding process has piqued the interest of clients and based on the customer interest in “quoting activity”, the company believes prospects in the U.S. and Asia for voxeljet America and voxeljet China remains strong. These factors can be conducive to the second-quarter revenues performance of the company.

Also, Voxeljet’s second-quarter 2016 earnings are expected to benefit from its thriving global Systems business and continued Services revenue growth. As a matter of fact, continuous capacity expansion at the facility in Friedberg, Germany has significantly benefited volume and the number of shipped parts over the past couple of quarters, thereby driving Services revenues. Moreover, Voxeljet America, which has been one of the major profit churners since it commenced operations in 2015, is also expected to act as a fundamental catalyst for the quarter to be reported.

In addition, Voxeljet’s restructuring actions, which aim to transform the organization into a leaner one, hold promise. Previously, the company implemented a new ERP system to improve core operations and introduced “Matrix organization” to boost flow of information and remove the existing deficiencies hindering organizational performance. We believe that the diligent changes in the internal administration are likely to garner cost savings, thereby supplementing the company’s key financials for the quarter to be reported.

Despite these positives, there is no denying the fact that Voxeljet has repeatedly disappointed investors in the past with poor top- and bottom-line performances. Persistent macroeconomic headwinds across key end markets are expected to be the primary headwinds. In addition, Voxeljet’s high operating expenses has proved to be a drag on earnings over the past couple of quarters and is likely to hurt the upcoming earnings results as well.

Moreover, currency exchange costs have proved to be a major drag and may continue to weigh upon the quarterly performance. This apart, intensifying competition in the 3D printing industry adds to the company’s concerns. These factors may also weigh on the company’s sales and profits in the quarter to be reported.