Monday, July 29, 2013

Swedish 3D Printer Arcam AB: Small Company with Big Growth Projections (AMAVF)

We've looked at Arcam a couple times, they are one of the class acts in 3D printing metals. From $10.28 last September the U.S. traded ADR's are up to $66.48.

They are also very tiny; despite the sixfold run the company's market cap is less than $300 million. 
That combination, big run up yet small cap puts this in a much higher risk category than the megacaps we usually talk about on the blog. In fact this may be a situation where chasing is just plain dangerous.

Arcam AB: Small 3D Printing Company with Big Growth Projections
Swedish 3D Printing company Arcam AB has operations in Europe, the US, and China and operates exclusively in precision 3D printing of high grade metals used in the aerospace and orthopedic/medical industries.  

Arcam AB released their first half 2013 financial report on Friday and the results were impressive.  For the first half of 2013, Arcam AB reported an 80% increase in sales, and earnings of $0.30/share vs. $0.05/share for the first half of 2012 (after converting from the Swedish Krona to the USD).  Net profit margins were also higher at 8.3% vs. 2.3%.  More significantly, there are clear indications and projections of strong growth for the remainder of the year. 

This article will provide an overview of Arcam AB, their technology and patents, products and services, plans for US expansion, and a look forward at growth projections and sales pipeline of the company.

Arcam AB Overview
Arcam AB trades under the NASDAQ OMX ticker ARCM.ST and in the US as an ADR (American Depository Receipt) under the ticker AMAVF.

Following an institutional placement completed in June, the company has just 4.1 M shares.  With insiders and institutions holding about half of shares outstanding, the trading float is approximately 2M shares. 
 Arcam AB was founded in 1997 and began trading on the NASDAQ OMX in June of last year.  The company has 50 patents in 3D printing/additive manufacturing technology, with an additional 25 patents pending globally.   In the United States, the company has won nine patents to date with another 11 patents applied for.  Arcam AB is tiny in comparison to the major 3D printing companies that are currently publicly traded.

3D Systems (DDD)
Stratasys (SSYS)
ExOne (XONE)
Organovo (ONVO)
Arcam AB
Market Cap
Source: Yahoo Finance

Despite Arcam AB’s small size, their revenue growth is big at 80% for the first half of 2013, and their PE ratio for the trailing twelve month (ttm) period is the lowest in 3D printing stocks.

3D Systems (DDD)
Stratasys (SSYS)
ExOne (XONE)
Organovo (ONVO)
Trailing Twelve Month  PE Ratio
Not profitable
Not profitable
Not profitable
 Source: Yahoo Finance

Arcam AB Rumored as Acquisition Target
 Arcam AB had been rumored to be an acquisition target on 3D Systems’ list by William Blair analyst Brian Drab in May, but with the acquisition of metals 3D printing company Phenix Systems completed last week by 3D Systems, that now seems unlikely....MORE
Regarding the buyout rumors, on July 16 reported:
Just under a month ago 3D systems announced that it would be acquiring the French Direct Metal Selective Laser Sintering (DMSLS) firm Phenix. Well, this morning 3D Systems has announced that it closed the acquisition of the Riom based company, paying a reported $15.1M for 81%.... 
Sept. 2012 
Another Use for 3D Printing: Building A Beak for a Bald Eagle
Jan. 2013
What's Moving: 3D Printer Arcam AB Up 10.72% (AMAVF)