Red and green are some of the colours flashing rapidly at a fast pace in investors' portfolios over the past weeks, as volatility from geopolitical factors pours sand into the growth engine of some companies and economies, hindering future growth.
into the green as earnings indicate growth - we look into two companies, Desktop Metal Inc and Eastman Kodak; that have Desktop Metal Inc and from their midterm lows of $4/$3, surged by at least over 30% within the month to just above $5.10 as of writing.
Desktop Metal Inc (DM)
Desktop Metal is a 3D printing company that’s expanding into the go-to-market infrastructure in Europe, the Middle East and Africa (EMEA) and Asia-Pacific (APAC) regions - a market expected to reach $34.8 billion in value by 2026, from $12.6 billion in 2021. Some of Desktop’s clients include known brands like Toyota, Renault, Nissan, Amazon, Adidas, Siemens, SpaceX, and the American navy and air force. The company recently completed its ExOne acquisition, which is believed to reposition the company as a pioneer while broadening its additive manufacturing (AM)/3D printing market. According to Ric Fulop, founder and CEO of Desktop Metal:
"This acquisition is a landmark moment for the additive manufacturing industry and creates an unmatched portfolio that strengthens Desktop Metal's ability to accelerate the adoption of AM 2.0.
"We've begun the process of careful integration with the goal of driving outsized growth for the combined company in the years to come."
For the company’s 2021 financial year (FY21), revenue increased to $112.4 million, from $16 million the previous year (123% from the third quarter of FY21) - excluding ExOne revenue was $96.9 million, representing a 488% growth from FY21. Despite the net loss during the period, which included costs of the recent acquisition’s research and development assets, revenue from Desktop Metal offerings in FY21 improved by 163% from the previous year. "We're entering 2022 with considerable tailwinds toward another year of record growth, including continued momentum from the best quarter in company history, robust customer demand across our unmatched AM 2.0 solutions portfolio, and favorable market conditions as the additive market inflects," the CEO said.
"We believe our strategic priorities in 2022 will ensure continued success toward achieving our goal of double digit share of the over $100 billion additive manufacturing market by the end of the decade," he added.
Desktop closed the FY21 with a cash balance of $271.7 million, the company expects a revenue increase by 131%, in 2022, to $260 million.
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Eastman Kodak Company (KODK)
Kodak is a technology company that manufactures and supplies film and photographic products. Has the picture become clearer as the company's stock starts to rebound?
Kodak began its FY21 with a cash balance of $196 million, declining from $233 million in 2019. Despite the challenging year, the company managed to cut costs. "During 2020 the company improved its financial health by removing legacy liabilities and reducing costs, and the recently announced transactions put Kodak in a strong financial position and provided incremental liquidity to drive growth," David Bullwinkle, Kodak's CFO, said.
"We mitigated the impact of COVID with cost-saving initiatives, launched several innovative print-business products and generated cash in the third and fourth quarters," Jim Continenza, Kodak's executive CEO, added.
Moving into FY21, Kodak announced new, innovative products to enable profitability, a position to capitalize on growth opportunities, and advance the company's environmental targets through eco-friendly and recyclable print work - this is expected to come into the market by FY21 and FY22. As the core business continued to deliver strong organic growth that resulted in consolidated revenue of $1.15 billion by the end of FY21, net income was $24 million, from a loss of $541 million in FY20. Earnings before interests taxes, depreciation, and amortization (EBITDA) increased to $11 million from a loss of $1 million the previous period. Focusing on effectiveness and efficiency, Continenza said the company would spend on clients, innovations, and core businesses. "The company's balance sheet is the strongest it has been in years due to the execution of our strategy. We continue to execute on our plan by driving increases in cost efficiency through automation and process innovation and redesign," the CFO said.
Kodak's new innovations are expected to expose the company to the North American and European markets, and beyond. Proceeds from the transactions that were completed during the first quarter of FY21 contributed $247 million. The company closed its FY21 with a cash balance of $362 million.
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Informed decision
Global central banks, particularly the US Federal Reserve, continue to put in place measures to reduce the inflation rate, which is now also fuelled by the "global dependence shift". This may continue to bring about a volatile environment. Interest rates are among the factors that may affect lending costs in the short to long term of these companies, as they expand and introduce innovations, which may present an opportunity to buy the dip.
According to Refinitiv, the merger and acquisitions (M&A) rate – which surged by 64% In 2021 to reach $5.9 trillion in value – might continue to rise to new highs in 2022. Companies trading at low prices with signs of growth could also become M&A targets that may be at a premium for investors.
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Sources – EasyResearch, Eastman Kodak Company, Desktop Metal Inc, Lexology, Globalnewswire.
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