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As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at custom parts manufacturing stocks, starting with Proto Labs (NYSE:PRLB).
Onshoring and inventory management–themes that grew in focus after COVID wreaked havoc on global supply chains–are tailwinds for companies that combine economies of scale with reliable service. Many in the space have adopted 3D printing to efficiently address the need for bespoke parts and components, but all companies are still at the whim of economic cycles. For example, consumer spending and interest rates can greatly impact the industrial production that drives demand for these companies’ offerings.
The 4 custom parts manufacturing stocks we track reported a softer Q2. As a group, revenues missed analysts’ consensus estimates by 5.1% while next quarter’s revenue guidance was 6.7% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Amidst this news, custom parts manufacturing stocks have had a rough stretch. On average, share prices are down 11.3% since the latest earnings results.
Best Q2: Proto Labs (NYSE:PRLB)
Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.
Proto Labs reported revenues of $125.6 million, up 2.8% year on year. This print was in line with analysts’ expectations, but overall, it was a decent quarter for the company with strong earnings guidance for the next quarter.
"We executed well through the first half of 2024 despite operating in a challenging macroeconomic environment,” said Rob Bodor, President and Chief Executive Officer.
Proto Labs pulled off the fastest revenue growth of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 27.8% since reporting and currently trades at $1.95.
Read our full report on Proto Labs here, it’s free.