Why 3D Systems Corporation Shares Plummeted Today

Is 3D Systems' plunge meaningful? Or just another movement?

Apr 29, 2014 at 12:41PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of 3D Systems Corporation (NYSE:DDD) fell more than 10% early Tuesday, despite solid first-quarter results from the additive manufacturing specialist.

So what: Quarterly sales rose 45% year over year to $147.8 million -- including organic growth of 28% -- which translated to adjusted earnings of $0.15 per share. Analysts, on average, were expecting the same earnings of $0.15 per share, but on slightly lower revenue of $145.5 million.

The market was less enthused, however, about 3D Systems' full-year guidance. Despite the small top-line beat, 3D Systems chose to reiterate its previous targets, which call for revenue of $680 million-$720 million, with adjusted earnings per share in the range of $0.73-$0.85. The mid-point of both ranges sits slightly below analysts' expectations for 2014 revenue and earnings of $701 million and $0.81 per share, respectively.

Now what: It's obvious the market was hoping for a bigger beat and raise, but I think there was plenty to like about 3D Systems' report. For example, unit sales growth of design and manufacturing printers rose 76% over the same period last year, while consumer revenue climbed 150% to $9.7 million this quarter thanks to a strong showing from its Cube printer lineup. Meanwhile, 3D Systems says its March 2014 backlog included $17.9 million of printer orders, in part due to demand continuing to outstrip manufacturing capacity for its Direct Metal 3D printers.

Better yet, while 3D Systems' increased investments in sales, marketing, and R&D continue to pressure quarterly earnings, CEO Avi Reichental insisted they expect more attractive operating leverage to "resume in the second half of 2015 and be fully restored the following year."

With shares now down more than 50% year to date -- and keeping in mind I've long suggested 3D Systems' investment strategy is great to see as it shuffles for position in a burgeoning industry -- I think today's pullback is a perfect opportunity for patient, long-term investors to add to their positions.

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Steve Symington owns shares of 3D Systems. The Motley Fool recommends 3D Systems. The Motley Fool owns shares of 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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