3D Systems (DDD, Financial) delivered robust growth across all its segments in the previous quarter. However, the company saw weakness in its organic category on the back of its inability to fulfil demand for direct metal printers and consumer products. But, the company is now focusing on certain initiatives to improve its performance. It is investing in the healthcare and the direct metal segment, which are showing positive signs and are expected to deliver growth ahead of the industry average.
A closer look at the performance
In the recently reported quarter, the company delivered strong improvement in revenue, which increased 29%. This indicates that there is robust demand for its products in the market. This can be said because even in the previous quarters, 3D Systems saw higher order bookings. 3D Systems is expecting better demand for its products in the coming quarter.
Moving on, 3D Systems is pleased with benefits that it is getting from the effective investments it made to build an end-to-end healthcare business. The efforts are paying off and the company is seeing good improvement in the earnings and revenue from this initiative made in the past. 3D Systems, in order to penetrate more in the healthcare segment has made significant acquisitions in the past that helped it to extend its presence in personalized medicine. With this, 3D Systems got deep rooted in the virtual surgical planning. Again, 3D Systems is finding good growth opportunities in the dental segment also. With the acquisition of LayerWise, it is now enhancing its capabilities in medical and dental direct metal 3D printed devices and implants.
Ramping up production
The company is seeing growth in the demand. To be able to meet the demand it is ramping up the production in a second direct metals facility. 3D Systems is pleased with some great growth opportunities that it is seeing with the industrial grade direct metal printing. With this 3D Systems will be able to see a market leading position in the manufacture flight ready aerospace parts, functional automotive assemblies and ready to use medical devices. Having acquired LayerWise and Phenix, 3D Systems is confident to be well positioned the booming demand in this attractive market.
The company is also has many new products in its product pipeline. It is eager to bring in some new designs and manufacturing products during the upcoming Euromold 2014 show. The new production printers and materials are expected to be centre of attraction of the show. 3D Systems is well positioned for a good fourth quarter. It is focusing all its efforts towards its objective of improving profitability. Having closed its recent product availability gap in consumer and metal printers, the company is expecting these categories to contribute favourably to its growth in the coming quarters.
Conclusion
The stock looks highly overvalued with trailing P/E of 100.32. But, if we look at the forward P/E of 33.28, the stock is showing robust growth in earnings. Further, in the next five years its earnings are expected to grow at 22.33%, which is better than the industry average of 15.07%. Considering all the aspects, it can be seen that the stock is a good pick.
