Can This Company Still be The Leader Of The 3D Printing Market?

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Nov 07, 2014

The printing technology has been always changing from dot matrix printers to 3D printers. 3D printing is a technology that creates objects through sequential layering. As the costs of 3D printers have come down, they are becoming more appealing financially to use for self or the manufacturing of personal products.

The worldwide 3D printer market is supposed to grow at an annual rate of 25%. They can be useful in various sectors and are advancing fast. For investors, 3D printing is a technology share that could give better returns; in the long term, 3D printing is going to make better products cheaper and faster.

Printer manufacturing companies had been recording new sale revenue figures with evolutions of new printing technology. 3D Systems (DDD, Financial) is one such company that had been reaching new heights with its stocks booming, but this now seems to be history. The investors of 3D Systems seem to be frowning as its stock prices have been tumbling, and it seems that they can’t really smile soon. The competition is fierce in this, and, with many patents expiring in 2014, companies like 3D Systems seems to have a rough journey ahead.

3D Systems Corporation is the solution provider for 3D content-to-print solutions including 3D printers, print materials and 3D authoring solutions for industrial to personal use. The company also manufactures scanners for medical use. The company had shown a steep rise in its share price 52-week high of $97.28 from the lows of 30.07 with a 52-week change of 88% approximately with an annual average growth rate of 26%. Market capital of $5.7 billion having a high P/E ratio of 123, EPS of $.45 and no history of dividend paid. The above figures are promising, but there are certain things an investor should evaluate before investing.

  1. There are several other companies in this segment such as STRATASY DASSAULT SYSTEMS and HP also and several other major players will enter the market.
  2. Currently the market is dominated by the U.S., but some of the Korean companies are also selling 3D printers that could increase the competition by giving the product at a lower price, which could affect the financials of the company.
  3. According to some reports, IT majors such as Google (GOOG, Financial) (GOOGL, Financial), Amazon (AMZN, Financial) and Microsoft (MSFT, Financial) may enter the 3D printing market due to unlimited potential. This may lead to a price war, and it will definitely have an impact on the share price of 3D Systems as these players have lot of cash for the war. But what I think is that there are several companies that can outperform such as stated above, but I would like to mention GROUPE GORGE as well.
  4. Though Graphene Laboratories, Inc. is a privately held company, there is news that it has been acquired by Limiko Metals
  5. Makerbot's Replicator2 competed 3D Systems' Cube printers. Stratasys (SSYS, Financial) bought Makerbot and now have cash to build the brand.The investors should take this into account.
  6. Stratasys has shown impressive numbers – 43% revenue and 52% earnings growth per year over the last three years. But the company now trades at 58 times earnings when analysts only expect earnings to grow by 31% between 2013 and 2014.
  7. Stratasys has been acquiring less frequently than 3D Systems, Only two in the past year, one with an Israeli company for new technologies as well as new industrial markets. The second is with Makerbot.It shows the view that investors money is spent well

Conclusion

Dividend stocks can make you rich. It's as simple as that, and they are also less likely to crash and burn. Investors of 3D Systems mostly gained from price hikes in the past but were famine struck for dividend. With bigger players like HP also planning to launch low-cost 3D printers, 3D Systems may find it hard to acquire a market share that it has been achieving in the past. Stocks prices have also declined in 2014 and seems it’s a long wait before we can witness any growth in prices for 3D systems