PRLB · Proto Labs
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $84.39
Note written ·
Price against the kill line
20.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $84.39, on record since 11 November 2026. The shares are down 25.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $84.39, a level the shares have not closed above since the 29 October 2026 report drop, which would show the shares leading. Fourth-quarter non-GAAP gross margin back above the second quarter's 46.4% would also show it.
Research onlyNot in the portfolio.
Key figures from the filings · Industrials
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 154
- Revenue, change on a year (%)
- +14.0
- Gross margin (%)
- 44.5
- Operating margin (%)
- 9.4
- Free cash flow, four quarters ($M)
- 48.6
- Price to earnings (×)
- 46.0
- Free-cash-flow yield (%)
- 3.0
All filed numbers
What Proto Labs reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 154 | +14.0 | 44.5 | 9.4 |
| first filed | 149 | +10.6 | 46.4 | 7.6 |
| first filed | 139 | +10.4 | 45.6 | 7.1 |
| first filed | 137 | +12.1 | 44.2 | 5.0 |
| first filed | 135 | +7.8 | 45.3 | 6.5 |
| first filed | 135 | +7.5 | 44.3 | 3.7 |
| Pre-tax income ($M) | 16.2 |
| Net income ($M) four quarters: 35.0 | 11.8 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +1.0 |
| Operating cash flow ($M) | 72.2 |
| Capital spending ($M) | 23.6 |
| Free cash flow ($M) | 48.6 |
| Cash and short-term investments ($M) | 151 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) at 31 December 2025, filed 20 February 2026; +10.3% on a year | 9.6 |
| Receivables ($M) | 99.3 |
| Inventory ($M) | 16.5 |
| Shareholders' equity ($M) | 702 |
| Market value ($M) | 1,613 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | 46.0 |
| Price to book value (×) | 2.3 |
| Free-cash-flow yield (%) | 3.0 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.7% of shares outstanding sold short, 3.2 days of average trading to cover, −11.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $101K | $903K |
| 12 monthsfrom | $101K | $3.3M |
The thesis
Proto Labs' shares are more likely to lag the S&P 500 than lead it over the next three months. Record third-quarter revenue and a raised 2026 growth forecast were overshadowed by a gross margin that fell to 44.5%, and the fourth-quarter report, expected in late February 2027, shows whether margins recover.
The shares closed at $68.61 on 12 November 2026. That is 31.4% below the 52-week intraday high of $99.96 set on 6 October 2026 and 25.3% lower than three months earlier. The 52-week closing low is $46.81, set on 20 November 2025.
At $68.61 the shares sit below the 200-day average of $73.80, so the market is pricing the margin decline as lasting rather than as a one-quarter dip.
The company's own insiders bought after the drop. Chief Executive Officer Krishna Suresh bought 750 shares at $69.52 on 2 November 2026, and director Rainer Gawlick bought 720 shares at $68.18 on 3 November 2026 (SEC Form 4 filings dated 4 November 2026). The purchases are small, and the shares have not recovered the post-report losses.
Bullish and bearish views on Proto Labs, Inc.
The bull case on Proto Labs, Inc. (PRLB), in brief: revenue beat guidance and estimates. The bear case: gross margin fell.
Bull case
- Revenue beat guidance and estimates. Third-quarter 2026 revenue was a record $154.3 million, up 14.0% from a year earlier. It topped the company's own $145.0–$153.0 million range and the $149.037 million analyst estimate (company results release, 29 October 2026).
- The growth forecast moved up. On 29 October 2026 the company raised 2026 revenue-growth guidance to 10%–11% from 8%–10%.
- Every large service grew. Injection molding grew 12.5% to $53.7 million, computer numerical control (CNC) machining 16.4% to $73.4 million, and 3D printing 11.4% to $22.4 million, a turn from a 2.6% decline in 3D printing in the second quarter (Protolabs release, 29 October 2026).
- Profit rose faster than sales. GAAP (generally accepted accounting principles) operating margin was 9.4% against 6.5% a year earlier. Non-GAAP diluted earnings per share were $0.63 against $0.47 and above the $0.60 estimate.
- Insiders bought and cash grew. The CEO and a director made open-market purchases on 2 November 2026 and 3 November 2026 (SEC Form 4). Cash and investments were $175.0 million on 30 September 2026, up from $162.9 million on 30 June 2026. The company said on 3 November 2026 that it raised Multi Jet Fusion 3D printing capacity by 50%.
Bear case
- Gross margin fell. Non-GAAP gross margin was 44.5% in the third quarter, against 45.9% a year earlier (company release) and 46.4% in the second quarter (TIKR). Chief Financial Officer Dan Schumacher attributed the decline mainly to higher raw material costs, plus machine upgrades and added labor and contractor support.
- The fourth-quarter outlook is lower. Revenue guidance of $143.0–$151.0 million tops out below the $154.3 million reported for the third quarter. Non-GAAP earnings per share guidance of $0.46–$0.54 compares with $0.63 in the third quarter.
- The shares fell on a beat. TIKR reported a 15% drop on 29 October 2026 to a close near $78. The shares closed at $63.03 on 5 November 2026, with no new company filing explaining the further decline.
- Sheet metal shrank. Sheet metal revenue fell 4.7% in the third quarter (company release, 29 October 2026), the one large service that declined.
- Valuation was high going in. TIKR said the shares were near the top of their five-year valuation range before the report, which left little cushion once margins slipped.
- Robotics still lacks a dollar figure. The third-quarter release does not mention robotics. The only disclosed figure remains a growth rate for first-half 2026 revenue from robotics customers.
Price setup
The shares closed at $68.61 on 12 November 2026, up from $63.03 on 5 November 2026 and $65.69 on 6 November 2026. Closes since then: $69.09 on 9 November 2026, $67.93 on 10 November 2026 and $69.11 on 11 November 2026.
The 200-day average of closes is $73.80 and the 50-day average is $84.19, both as of 12 November 2026. The shares sit below both. The 50-day average is falling toward the shares as the high-priced September and October sessions roll out of the window.
The sequence runs from the 52-week intraday high of $99.96 on 6 October 2026, to a close near $78 after the 29 October 2026 report (TIKR), to the $63.03 close on 5 November 2026. The second stage of the decline came after the report had been digested, which points to selling on the margin outlook, not on the headline results.
No company report falls inside the next 30 days. Insider selling earlier in the run-up came from the chief financial officer, who sold 5,000 shares at $85.21 on a 16 September to 17 September 2026 average and 5,000 shares at $95.32 on 24 September 2026, both under Rule 10b5-1 plans (SEC Form 4 filings).
Catalysts ahead
- ~26 February 2027 (est.): Fourth-quarter and full-year 2026 results (date unconfirmed). Shows whether gross margin recovers from 44.5% and whether revenue lands in the $143.0–$151.0 million guidance range.
What would change the view
A daily close above $84.39, a level the shares have not closed above since the 29 October 2026 report drop, which would show the shares leading. Fourth-quarter non-GAAP gross margin back above the second quarter's 46.4% would also show it.
What it trades with
Proto Labs sells custom prototypes and low-volume parts to engineering and product-development teams, so revenue follows industrial and product-development budgets. It trades with small-cap industrial and manufacturing-services shares. Raw material prices, including metals and plastic resins, feed directly into its gross margin.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was a record $154.3 million, up 14.0% from a year earlier; GAAP operating margin was 9.4% versus 6.5%. Protolabs third-quarter 2026 results release · as of
- Full-year 2026 revenue-growth guidance was raised to 10%–11% from 8%–10%. Protolabs third-quarter 2026 results release · as of
- Fourth-quarter 2026 guidance: revenue $143.0–$151.0 million; non-GAAP diluted EPS $0.46–$0.54; GAAP diluted EPS $0.28–$0.36. Protolabs third-quarter 2026 results release · as of
- Third-quarter service growth: injection molding +12.5%, CNC machining +16.4%, 3D printing +11.4%, sheet metal −4.7%. Protolabs third-quarter 2026 results release · as of
- Non-GAAP gross margin was 44.5% versus 45.9% a year earlier; the CFO cited higher raw material costs. Protolabs release; TIKR · as of
- Shares fell 15% on 29 October 2026 to a close near $78 despite the record quarter. TIKR · as of
- CEO Krishna Suresh bought 750 shares at $69.52 on 2 November 2026; director Rainer Gawlick bought 720 shares at $68.18 on 3 November 2026. SEC Form 4 filings dated 4 November 2026 · as of
- Cash and investments totalled $175.0 million, up from $162.9 million on 30 June 2026. Protolabs third-quarter 2026 results release · as of
Sources
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