3D Systems Corp (DDD, Financial) provides content-to-print solutions that include 3D printers, print materials, on-demand custom parts services and 3D authoring solutions globally. In addition, it also provides scanners for a variety of medical and mechanical X-Ray film digital archiving. I had covered this stock last week and had recommended to stay away or sell. The company declared first-quarter 2015 report last week and the results were a repeat of a miss like previous quarters. Let’s preview the results.
Looking back
The 3D printer maker reported revenues of $160.7 million during the first quarter, representing a year-over-year growth of 8.8% after taking into account the negative impact of currency fluctuations. On constant currency terms, the revenue jumped 17% year-over-year but it fell short of consensus estimates of $166 million.
The top-line growth was on the back of improvement in the Direct Metals and Healthcare business line, registering year-over-year revenue growth of 39% and 38%, respectively. In addition, the year-over-year growth of 65% and 31% in the Consumer product line and Services, respectively, also added to top-line growth.
On the back of a revenue miss, earnings came in at $0.05 per share and adjusted loss per share was $0.01. The company has a really poor track record, having missed estimates in each of the last four quarters at an average rate of 20.83%.
Few positives
- Despite the muted results, the 3D printer maker has completed the construction of a 70,000 square feet healthcare facility in Littleton to cater to the rising demand for its personalized healthcare products and services.
- The company has completed the installation of high-speed 3D printer in Wilsonville in order to gear up for next-generation manufacturing applications.
- Expanded the Quickparts direct metal and selective laser sintering 3D printer product line in order to capture additional market share.
- Completed two acquisitions -- Cimatron and Easyway. With acquisition of Easyway, the company expects to improve its prospects in China.
- On the back of recent acquisitions and satisfactory order levels, Management expects to deliver better results going forward.
Few negatives
- The company has withdrawn the guidance for next quarter and fiscal 2015.
- The stock has witnessed a huge price decline and down ward revision in earnings for the next quarter and fiscal 2015. For the full year it has seen 5 downward revisions with no upward revision. The stock has lost around 30% year-to-date and around 53% in the last one year. Over 14% loss has been in one month.
- Financing serial acquisitions and continued investment in research and development have taken a toll on the company’s financial metrics.
- Fierce competition in industry, negative impact of currency fluctuations and economic uncertainty continue to be major headwinds for the company.
Final words
Currently, the negatives far outweigh the positives. The stock has seen dismal performance on the Street recently and negative sentiment persists. The stock may be a lot closer to a bottom now, but definitely that point is still not attained. The bears are in full control of 3D Systems and they are the only ones who have been making money during the last one year or so.
Exiting certain underperformers at the right time also maximizes portfolio returns, and 3D Systems is one such stock. For the moment one is best advised to stay away from 3D Systems and this is a definite sell.
