3D Systems (DDD, Financial) will be reporting its third-quarter earnings today before the market opens, and there is a lot of speculation happening around the numbers. As rival Stratasys (SSYS, Financial) third quarter was a poorly performing one, it has created a suspense as to whether 3D Systems will also follow suit or will stand apart and give a decent performance this quarter. In fact analysts are hoping that the 3D industry does not face any slowdown and that will be clear only after the third quarter report card of 3D Systems is out to be compared. Let’s focus and find out what are the key metrics being shared about the earnings.
The earnings whispers
The company offers content-to-print solutions which include 3D printers, print material as well as on-demand custom parts services. In fact, the company did not so well in the past quarter when it posted a 26.7% negative surprise. However, Wall Street expects the company to announce earnings of $0.17 per share and revenue of $167.71 million for the quarter. As the company has executed several strategic acquisitions in the past to broaden its presence in the 3D printing market and has also added on a number of key distributors, analysts are still optimistic on the third quarter results.
Analysts opine on the stock
3D systems have a 1-year low of $34.82 and 1-year high of $97.28. Presently the stock has traded downwards hitting $34.29 during mid-day trading last Friday. The company has a market cap of $3.769 billion and a price-to-earnings ratio of 101.19. A number of research firms have commented to the future of the stock. Two investment analysts have rated the stock with a sell rating, 15 have given a hold rating and nine have assigned a buy rating to the company. The stock has an average rating of “Hold” which is impressive as the 3D printing market is under pressure and 3D systems results will either testify this pressure or will show signs of prosperity even when there are headwinds chasing its bottom line.
Future of 3D Systems looks promising
3D Systems' gross profit margin had got compressed by 400 basis points year over year to 47.8% when CFO Damon Gregoire assured investors that the margins were poised to show a rebound in the next quarters. The organic growth rate had fallen to 10% in the second quarter from 28% seen in the first quarter. The pace of organic growth has also improved during the quarter. And the best part is that 3D systems keeps on highlighting the increased demand for its metal 3D printers, something it has always found difficult to manage despite adding more manufacturing capacity.
With improved demand for 3D printers worldwide and if the company is able to keep its gross margins at a sustainable level, investors might see a better picture after the results get released. The management had spoken of the larger direct metal printer that is being developed to make the debut at EuroMold 2014, a conference known to be the largest display of 3D printers in Europe. More is expected to be revealed in today’s earnings call on the pace of such development which might aid in keeping the stock price moving in the upward direction.
Final word
All said and done, the truth is yet to be revealed after 3D systems brings out the quarter results which might serve as an impetus to its stock movement, if its better off from what was seen in the second quarter. So, let’s stay tuned and watch out if the actual earnings meet, beat or are below the analysts’ predictions for the quarter.