What happened
Shares of 3D Systems Corporation (DDD -2.59%) had a rough start to the trading day Thursday, falling as much as 19.2% after reporting earnings. At 10:30 a.m. EDT shares were still down 18.5% on the day.
So what
Revenue in the second quarter rose 1% to $159.5 million at 3D Systems, although that fell well short of the $162.5 million analysts were expecting. Net loss nearly doubled to $8.4 million, or $0.08 per share, although on a non-GAAP basis earnings were $0.08 per share, $0.04 short of estimates.
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What really disappointed investors was management revising full-year guidance to revenue of $643 million to $671 million with earnings per share about flat compared to the $0.46 a year ago. The growth rate was revised from 2% to 8% to a new range of 2% to 6% and the earnings guidance is down from $0.51 to $0.55 given only three months ago.
Now what
3D Systems hasn't been able to live up to its potential as a high growth company, which is really what's driving the stock lower. Investors once thought this would be an explosive growth business as everyone from retail consumers to high end manufacturing companies would begin printing parts with 3D printing. The business has become more widely adopted, but not at the rate hoped and that makes it tough to maintain a high P/E ratio in today's market. Shares are now trading at about 31 times this year's expected earnings, which isn't cheap but may end up being a value as more reliable long-term customers begin to print 3D parts and the market matures overall. Results weren't what analysts expected this quarter, but management did say they're moving toward a business with more durability and repeatability, which is good news for long-term investors.
