3D Systems' (DDD, Financial) fourth-quarter earnings results are around the corner. The company is seeing solid sales growth momentum. It is experiencing relatively strong demand for its product, driving growth for its order book. Its order book had grown $46.0 million in the last reported quarter. Also, the company has successfully reduced the product availability gaps between consumer and metal printers this quarter. Moreover the company should benefit from the higher consumer and newer product launches that should enhance its performance for the fourth quarter 2014. Let us look at its key potential that could possibly drive its growth in the future.
Undertaking growth-oriented moves
3D Systems is making various cost effective and decisive investments that should help the company develop an end-to-end 3D healthcare business. DDD has recently acquired two big giants in medical lines LayerWise and Simbionix. LayerWise is anticipated to augment its capabilities in medical and dental direct metal 3D printed devices and implants while Simbionix is expected to enlarge its reach into personalized medicine. Simbionix is one of the leading providers of 3D virtual reality surgical simulation and training products.
Meanwhile, the company remains on track to build proprietary direct metal printing technology. It had earlier in the beginning of the year acquired Medical Modeling. Medical Modeling provides proprietary virtual surgical planning and leads in medical device 3D printing expertise. These acquisitions should enable the company to effectively offer its integrated 3D solutions to its consumers across the world. These acquisitions will assist the company to enlarge its expertise from that of training room to the operating room driven by its proprietary digital thread.
Further, the company is aggressively integrating this assembled and strategic product portfolio into a more interconnected and synergistic family of products and services that should certainly accelerate its growth in the long run. 3D Systems sees tremendous growth opportunities for its proprietary 3D healthcare solutions that should not only deliver profitable outcome for the company but create value for shareholders in the future.
In addition, it has drastically reduced the gaps between consumer and metal printers. It has bought a second live manufacturing line of late that should enable the company satisfy the increasing metal printer demand in the markets. Moreover, the company has started shipping its latest consumer printer that should certainly accelerate its sales performance. DDD has observed strong initial traction with this metal printer across the region. The company was not able to monetize the available demand in the markets for its metal printers during the third-quarter as it failed to add incremental capacity for rising demand for metal printers.
Ramping up production
3D Systems is additionally ramping up its production in the second direct metal facility that will help the company to accomplish the rising demand for its metal printers in the long-run as well. DDD sees remarkable growth prospects for its metal printers in the future. The growing demand for manufacturing of flight-ready aerospace parts, functional automotive assemblies, production tire molds and ready-to-use medical devices will drive its growth in the long-run and fetch profitability for the company in the future.
Apart from these growth drivers, the company is also executing various initiatives such as adding powerful synergistic technologies, domain expertise and incremental sales channels with growing acquisition that should possibly add value to the overall performance for the company going forward. Moreover, the company looks strong to acquire a United States-based regional service bureaus that would undeniably increase its chances of fetching additional share in the aerospace and industrial applications.
Conclusion
3D Systems looks pretty strong with these strategic initiatives that should accelerate its profitability going forward. Also it has made various strategic acquisitions and remains on track to integrate the product and services to its product portfolio and services that should comprehensively uplift its performance in the future. The analysts have estimated CAGR of 22.33%, greater than average industry CAGR of 15.06% for the next five years that unveils incredible growth prospects for the company in the long run.
The stock is currently trading at the trailing P/E of 104.99 and forward P/E of 34.17 that indicate strong growth prospects for the company going forward. It has profit and operating profit margins of 6.08% and 10.25% respectively for the trailing twelve months. Its balance sheet carries total cash of $570.26 million, which is enough to cover its total outstanding debt of $18.96 million. It has operating cash flow of $41.12 million and leverage free cash flow of $49.56 million.
