Shares of 3D printing company Stratasys (SSYS, Financial) tumbled 12.5% after the company reported disappointing second-quarter earnings results. The stock price dropped to $6.72, reflecting the market's response to the company's underwhelming full-year revenue, EPS, and EBITDA guidance falling short of Wall Street’s estimates.
Stratasys announced an operational restructuring plan which includes a 15% reduction in its workforce. This move aims to streamline operations and cut costs, but it has raised concerns among investors about the company's current financial health and future profitability.
Analyzing the stock data, Stratasys appears to be facing significant financial challenges. The company has a severe Altman Z-score of -0.75, indicating a high risk of bankruptcy within the next two years. Additionally, the Piotroski F-Score of 1 further suggests poor business operations. The company’s gross margin has steadily declined at an average rate of -3.2% annually, while the operating margin has plummeted by -59.8% per year over the last five years.
On the brighter side, Stratasys has some positive indicators. The Beneish M-Score of -2.75 implies that the company is unlikely to be manipulating its financials. Additionally, the company boasts a strong interest coverage ratio, allowing it to comfortably cover its debt with existing cash reserves, indicating stable financial footing in terms of liquidity.
Valuation metrics present a mixed picture. The stock's Price-to-Book (PB) ratio is 0.55, close to its 10-year low, suggesting it might be undervalued. The Price-to-Sales (PS) ratio of 0.72 also hovers near historical lows. These figures might make Stratasys an attractive proposition for value investors looking for a potential turnaround story.
According to GuruFocus, Stratasys's GF Value stands at $15.28, significantly higher than its current trading price. This gap could indicate a potential upside for investors willing to weather the company's short-term volatility. For more information on the GF Value, check the [GF Value calculation for Stratasys](https://www.gurufocus.com/term/gf-value/SSYS).
In summary, while Stratasys has substantial challenges to overcome, particularly regarding growth and profitability, its low valuation ratios and solid liquidity provide a silver lining. Potential investors should weigh these factors carefully before making any investment decisions.
