Why 3D Systems Corporation Shares Plummeted Today

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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Read/Post Comments (14) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On April 29, 2014, at 1:07 PM, ScoopHoop wrote:

    This is a high flying stock with a P/E over 100. Yes, this is a growing company, but investors can get hurt if they time their purchase incorrectly. Be careful. Conservative investors would be better off owning dividend paying stocks like HSY, XOM, UNP, D and WR.

  • Report this Comment On April 29, 2014, at 1:10 PM, stocksolution wrote:

    DDD at this price level would be a good takeover for Hewlett Packard (HPQ) to get into the 3 d business

  • Report this Comment On April 29, 2014, at 2:57 PM, huibs wrote:

    <i>Plummeted</i>??

    ..I didn't think those kinds of words were used around these parts for a relatively minor move in a high beta stock..

    ..the 50% fall from the peak may be classified as a plummet, but the 6% move today??..

  • Report this Comment On April 29, 2014, at 3:05 PM, FrankoJames wrote:

    As funny as this seems, I am a buy till you die kind of guy. If DDD has great earnings today, I can not wait until they start selling those printers in leading retailers around the world. It is difficult to change the world if we all live in a bubble. Noteworthy, those 3D GOOGL skins are going to be great.

  • Report this Comment On April 29, 2014, at 3:05 PM, FrankoJames wrote:

    I thought the numbers sounded great. I have no options...

  • Report this Comment On April 29, 2014, at 3:17 PM, FrankoJames wrote:

    HPQ does not have the cash in the bank to keep up with this company.

  • Report this Comment On April 29, 2014, at 4:31 PM, melfizz wrote:

    Done of those investors that got "hurt" by buying 3D. I bought during the "great" dip from 97.00 to 80.00. (late January) I bought more as it dropped significantly, thinking each drop would be the last. Well, I'm not even going to tell you how much I'm in the red with this company, but it's where I own the most stock and I hope that it will be a different picture in 10-20 yrs.

  • Report this Comment On April 29, 2014, at 5:01 PM, TangoXray7 wrote:

    My basis is $44. I didn't sell at $80 and I'm not selling now. After reading a truly outstanding quarter report I bought another tranche. Fools rule!

  • Report this Comment On April 29, 2014, at 5:06 PM, FrankoJames wrote:

    In 20 years this company could be the next GOOGL, in terms of market capitalization, or bankrupt.

  • Report this Comment On April 29, 2014, at 5:14 PM, TangoXray7 wrote:

    @Franco: Maybe you're right, but I'd guess you and I both know a purchase of DDD by HPQ would be a slow and inevitable death spiral. Let's hope that never happens.

  • Report this Comment On April 29, 2014, at 5:17 PM, FrankoJames wrote:

    And if you are wondering, I do not believe that there is a Staples in Russia, Poland and/or the Ukraine, but I could be wrong, all of those counties have very strong manufacturing abilities from a macro perspective. Enjoy.

  • Report this Comment On April 29, 2014, at 5:28 PM, TangoXray7 wrote:

    @Franco: That's a pretty broad prediction isn't it? A 100 bagger or bankrupt?

    I affirm your prediction; in 20 years DDD will either be worth 100 times what they are now, or they'll be bankrupt.

    Please write that prediction down and attribute it to me.

  • Report this Comment On April 29, 2014, at 5:34 PM, TangoXray7 wrote:

    @Franco: I'd like it if there were a Staples participating in this program within 50 miles of me. My problem is I need a small plastic part that forms the base of a shift lever for a Porsche 928. The part was damaged by a technician installing a stereo system in the car 10 years ago; the idiot laid on it and it broke.

    A new shift handle for a 1980's 928 is $450. The part is probably worth $5. DDD and Staples can make the part for just about what it's worth.

    How long do you think this disparity can exist?

  • Report this Comment On April 29, 2014, at 5:48 PM, TangoXray7 wrote:

    There's a Staples in Wyoming. That should settle your mind.

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