Can 3D Systems Corporation (DDD) Live up to Expectations?

Page 1 of 2

3-D printing veteran 3D Systems Corporation (NYSE:DDD) reports fourth-quarter results on Monday morning next week. Expectations are sky-high: The stock has soared 166% over the last year, despite losing some steam in the final stretch. Shares plunged 6.7% today and more than 16% since Feb. 11.

Analysts expect the company to report adjusted earnings of $0.38 per share, up 137% from $0.16 last year. Sales should jump nearly 50% to $104 million. With numbers like these, it’s easy to see why investors are excited about the stock.

3D Systems Corporation (NYSE:DDD)Just how realistic are these soaring targets?

Word on the Street
3-D Systems analysts have actually been pretty reliable so far. When they err, it’s been on the side of caution. Earnings estimates have been spot-on for two of the five quarters in 3-D Systems’ young history as a public company, with solid beats in the other three periods. The story is the same on the revenue line. So it’s not like Wall Street likes to set unreachable targets for this company.

Analyst targets are also pretty much in line with management guidance. The company raised its full-year targets three months ago to account for strong demand in the third quarter. In particular, CFO Abe Reichental based his estimates on the company’s position to “monetize the expanding rapid manufacturing and health care opportunities in the emerging consumer opportunities.” In other words, there’s a quickly growing market for printing custom medical devices and other highly specialized consumer-oriented parts.

Now, the 3-D printing industry has come under fire from skeptics calling it a bubble with unsustainable valuations. These stocks sure shouldn’t appeal to traditional value investors — 3-D systems trades at 29 times forward EBITDA estimates, rival Stratasys, Ltd. (NASDAQ:SSYS) goes for 27 times EBITDA, and brand-new upstart ExOne Co (NASDAQ:XONE) a hair-raising 139 times. They also sell at very large multiples to current and forward sales, and don’t look cheap in any light I can think of.

You get what you pay for!
But huge growth never comes cheap. That’s one of the core tenets of our Rule Breakers newsletter, which often recommends big winners at seemingly insane prices — and has more than doubled the S&P 500′s returns since 2004 with that strategy. Stratasys is not only a recommendation here, but a core holding. Fool founder David Gardner, who manages Rule Breakers, has also recommend 3-D Systems in our Stock Advisor service — twice! The stock was recently picked as a “best buy now.” The man clearly believes in 3-D printing, even at these supposedly crazy prices.

3-D printing in general is poised to turn the manufacturing world upside down. The devices are inching down into affordable territory for common American households, and could soon become as mainstream as smartphones and single-serve coffee makers are today. When that happens, all three of these companies should start growing into their valuation on the back of exploding demand for renewable printing supplies. It’s the old razor-and-blades models all over again.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!