Is 3D Systems Corporation (DDD) Headed In The Right Direction?

Way back in February, 3D Systems Corporation (NYSE:DDD) shareholders were forced to endure one heck of a ride after their stock plunged more than 10% on two separate trading days.

The first time, I chalked it up to wider industry valuation concerns given the absence of any significant negative news. Besides, the stock was trading hands then for nearly 80 times trailing earnings, and some of my Foolish colleagues had been warning such a drop was possible as out-of-control valuations made them wonder whether 3-D printing stocks were a bubble waiting to pop.

However, three days later when the stock plunged again — this time as much at 15% during intraday trading — the culprit was 3D Systems Corporation (NYSE:DDD)’ sub-par earnings announcement coupled with light forward revenue guidance.

Despite the drops, however, I insisted nothing had happened to change the incredible long-term potential for the 3-D printing industry, so I pounded the bull’s table to say shares of 3D Systems Corporation (NYSE:DDD) should be bought.

Then, just four weeks ago, I was finally able to put my money where my mouth is and purchased my first shares of 3D Systems for my personal portfolio.

Image: 3D Systems Corporation (NYSE:DDD)

The good
Thankfully, Mr. Market made me feel great about that decision Tuesday as investors pushed the stock up nearly 7% following 3D Systems’ solid earnings report. Naturally, fellow 3-D printing gurus Stratasys (NASDAQ:SSYS) and ExOne were happily guilty by association and once again rode 3D Systems’ coattails to close up around 5%.

Of course, that’s not to say 3D Systems absolutely demolished expectations like newcomer ExOne managed last quarter. When all was said and done in March, 3D Systems grew first quarter revenue by 31% from the year-ago period to $102.1 million, largely in line with analysts’ estimates and helped by impressive 22.1% organic growth. Best of all, 3D Systems Corporation (NYSE:DDD) increased its printer sales by 81% year over year, and boasted of a 61% overall increase in combined printer and software revenue.

As a result, gross profit rose 38% as gross margin increased 250 basis points to 52.4%. Non-GAAP net income also grew 43% from the year-ago period to $18.9 million, in line with analysts’ estimates at $0.21 per share.

The bad?