3D Systems Corp. (NYSE: DDD) reported Q4 2013 earnings Friday morning before opening bell. One key thing to note: The results are not indicative of the massive potential of this company.
While this innovative provider of three-dimensional (3D) content-to-print solutions is having a rocky start in 2014, it's a good long-term investment.
Here's a closer look at where DDD is headed.
3D Systems (NYSE: DDD) in 2014
On Feb. 5, DDD preliminarily released its full-year guidance. 3D Systems dropped its outlook for full-year adjusted earnings per share (EPS) from analysts' expectations of $1.27 per share to between $0.73 and $0.85 per share.
And indeed, today the company posted EPS of $0.85 on revenue of $513.4 million, compared with EPS of $0.83 on revenue of $353.63 million in 2012. For the quarter, DDD reported EPS of $0.19 and $154.8 million in revenue, compared to an EPS of $0.26 on revenue of $101.57 million in the same period a year ago.
The company cited softer than expected demand for its consumer printers. It also stated that profits are weighed down by "very significant R&D, manufacturing and marketing investments designed to accelerate revenue growth."
The bad news caused DDD shares to drop 15.39%, but we knew in early January that this innovative provider of three-dimensional (3D) content-to-print solutions was ripe for a quick reversal.
"I love the products and love the potential, but 3D Systems has been bid up to amazingly high levels. It looks like a great short to me," Money Morning Chief Financial Strategist Keith Fitz-Gerald noted in his 2014 Market Forecast on Jan. 6. "Practically speaking, even though the company's products are at office supply stores and in catalogues, the average consumer hasn't gotten the bug yet so they aren't selling through. With a P/E of 200.89, I think it's ripe for a reversal just on a technical basis."
Fitz-Gerald pointed readers to short the stock - which ultimately offered gains as much as 30% on 3D System's Feb. 5 dive.
But going forward, Fitz-Gerald believes DDD's stock-price plunge is not a bearish signal for the company in 2014...
That's because of 3D Systems' consistent revenue growth, and its long-term potential in this booming industry.
Revenue growth is the key metric in ranking success in the 3D space, given that the industry is still budding. It's only later on that EPS will become the more relevant number, Deutsche Bank analyst Sherri Scribner told Barron's. For now, she believes investments in new products and technologies "are more important than delivering on EPS."
And even though 3D Systems significantly lowered its EPS 2014 outlook on Feb. 5, its revenue - and revenue forecast - has remained strong.
3D Systems (NYSE: DDD) Earnings Today
Today, the company announced its fourth-quarter revenue grew 52% from the prior year to a record $154.8 million on 34% overall organic growth. For the full year 2013, revenue increased 45% to a record $513.4 million on 80% printers and other products growth and 29% organic growth.
"We are pleased to report another record revenue quarter on robust professional and advanced manufacturing printers' demand, increased materials' growth rate and total unit sales that more than tripled last year's units," 3D Systems President and Chief Executive Officer Avi Reichental said with today's earnings release.
Predictions for 2014 are for revenue between $680 million to $720 million, which would significantly beat out Wall Street estimates of $671.3 million.
On top of record-breaking revenue growth, the company acquired more than 40 companies over the last three years and has increased its R&D spending. These are all signaling a future surge in growth.
Meanwhile, the 3D printing industry is on the verge of a boom - it's expected to double in size to $4 billion by 2015.
Industry consultants Wohlers Associates estimate the sale of 3D printing products and services will near $6 billion globally by 2017 and $10.8 billion by 2021.
"We believe that 3D Printing is at the cusp of accelerated growth and that the ultimate measure of our success will be the sustainable value we create from our share and scale gains over time," Reichental said today. "While our stepped up actions and investments pressured our quarterly earnings, we believe that our actions set the stage to substantially compress the time it will take us to extend and solidify our leadership position and deliver greater value."
Additionally, in January 3D Systems already announced a collaboration with Hershey Co. (NYSE: HSY) to develop ways to use 3D printing technology to produce food.
"It's a first of its kind deal and an only of its kind deal," a 3D Systems spokesperson told The Wall Street Journal.
Since its 15% fall on Feb. 5, DDD shares have regained that ground and then some, up 21.48%. The stock was up 1.79% in pre-market trading this morning prior to earnings release and now sits at $77.84 per share (up 4.26%) as of 10:08 a.m. EST.
People who want to invest in Bitcoin without the high risk of unregulated entities like Mt. Gox will soon get their wish when the Winklevoss Bitcoin ETF goes live, which is expected to happen before the end of 2014. Here's why having a Bitcoin ETF will be such a game-changer...Related Articles:
- 3D Systems: Q4 and Full Year 2013 Earnings
- Reuters: 3D Systems Cuts Quarterly Profit Forecast, Shares Fall
- Barron's:All Eyes on New Product Adoption, Revenue for DDD, SSYS Q4s: Deutsche
- The Wall Street Journal: Hershey, 3D Systems to Develop Printable Foods