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3D Systems (DDD) Up 3.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for 3D Systems (DDD - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is 3D Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

3D Systems' Q3 Earnings Meet Estimates

3D Systems third-quarter 2018 non-GAAP earnings of 2 cents per share came in line with the Zacks Consensus Estimate. The company incurred a loss of 20 cents in the year-ago quarter.

This 3D printer maker reported revenues of $164.5 million in the quarter, reflecting a year-over-year increase of 8%. Steady demand for the company’s healthcare, materials, software and on-demand manufacturing, along with increased printer unit sales proved conducive for the top line. However, revenues missed the Zacks Consensus Estimate of $170 million.

Positive reception of new products was a tailwind in the quarter.  Moreover, the potential launch of products in 2019 makes management optimistic.

Quarter Details

3D Systems’ Healthcare revenues were up 14% to $53.1 million year over year, driven by growth across all categories. The company began shipping NextDent 5100 printers during the quarter.

However, the company’s on-demand manufacturing revenues fell 3% to $26.3 million due to change in sales approach, which was undertaken during the quarter. Management notes that this is likely to remain an overhang in the fourth quarter.

Software revenues increased 8% year over year to $22.9 million. Material revenues jumped 2% to $40.3 million.

Printer revenues climbed 17% to $34.5 million. Meanwhile, printer unit sales surged 93%.

In the reported quarter, GAAP gross margin expanded 900 basis points on a year-over-year basis to 47.3%, driven by supply chain cost optimization initiatives.

In the third quarter, the company’s non-GAAP operating expenses decreased 3% to $73.7 million. Notably, the company’ non-GAAP SG&A and R&D expenses decreased 1% and 6% to $50.8 million and $22.8 million, respectively.

Cash Flow and Balance Sheet

3D Systems ended the third quarter with cash and cash equivalents of $92.1 million, down from $119.3 million in the previous quarter. The company used $2.9 million of cash in operational activities against $10.7 million of cash generated a quarter ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -50% due to these changes.

VGM Scores

Currently, 3D Systems has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 3D Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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