3D Systems Corporation (DDD Quick QuoteDDD - Free Report) is slated to report third-quarter 2016 results,before the opening bell on Nov 3.

3D Systems has an extremely volatile earnings history, oscillating between incredible beats and abysmal misses over the trailing four quarters. Last quarter, it had posted an incredible beat of 600%, which followed an abysmal negative earnings surprise of 400%.

Let's see how things are shaping up for this announcement.

Factors to Consider

3D Systems’ broad portfolio of healthcare offerings is likely to turn out to be one of the strongest profit churners in the upcoming quarterly results. Leveraging on its core competence in expanding healthcare solutions is one of the company’s five-pronged core growth strategies.

During second-quarter 2016, revenue from healthcare and related applications increased 11% year over year, driven by the company’s extensive offerings, as well as expansion by clients who print medical and dental devices. During the quarter, it expanded its Virtual Surgical Planning Reconstruction product line with the launch of “Jaw in a Day” service.

Particularly, precision healthcare offerings like printers and materials, surgical simulation and planning and printing of devices and tools contributed to growth. This apart, the company’s other four growth channels, namely expansion of quickparts services, accelerating 3D printer penetration through channel expansion, launch of integrated 3D authoring solutions platform and strengthening of partnerships are expected to prove conducive to growth in the soon-to-be-reported quarter.

In fact, the quarter saw 3D Systems forge an important partnership with PTC. This alliance will see the two leaders joining forces to integrate 3D Systems’ 3D Sprint SDK into PTC’s flagship Creo CAD platform. This will, in turn, deliver seamless CAD-to-print functionality to Creo users, in addition to an entire set of print management tools. Further, the leading 3D printing player launched its 3DXpert software for direct metal 3D printing.

During the quarter, 3D Systems released the Geomagic Control X software for 3D inspection and metrology — an easy-to-use solution that meets the measurement analysis requirements of manufacturers globally. The leading 3D printing player also launched its 3DXpert software for direct metal 3D printing. In addition, the company’s operational restructuring initiatives like improving the sales network as well as undertaking lean manufacturing initiatives in supply-chain operations are likely to drive results.

Over the past few quarters, the company has been witnessing particularly unfavorable broader market conditions that have hit its financial performance severely. It has been grappling with macroeconomic headwinds such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability. Further, sustained softness in prototyping, stiff competition and general macro headwinds which are affecting the sector, will likely also hurt 3D Systems’ results.

In the previous quarter, revenues from 3D printing products and services were significantly undermined due to continued challenging market conditions that hampered customers' capital investment cycles and reduced demand across all geographies.

Also, cutthroat competition in the industry, along with factors like escalating research & development and selling & administrative expenses are likely to impair the financials to some extent. However, the company’s restructuring initiatives might curtail costs and provide a much needed boost to profits.

3D SYSTEMS CORP Price, Consensus and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that 3D Systems will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at a break-even level.

Zacks Rank: 3D Systems’ Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP as well to be confident about an earnings beat.

Note that we caution against stocks with Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Avon Products Inc. , slated to release earnings results on Nov 3, has an Earnings ESP of +33.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ball Corporation , scheduled to release results on Nov 3, has an Earnings ESP of +5.44% and a Zacks Rank #2.

Enbridge Inc. (ENB Quick QuoteENB - Free Report) has an Earnings ESP of +27.59% and boasts a Zacks Rank #1. The company will report results on Nov 3.

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