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Why 3D Systems Stock Dropped 9% Today

By Rich Smith - May 3, 2018 at 4:48PM

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Wall Street was expecting a profit. It got a loss, instead.

What happened

Two months ago, three-dimensional printer manufacturer 3D Systems (DDD 0.48%) beat expectations with a preliminary earnings announcement and sent its stock soaring. Two months later, an earnings "miss" is having the opposite effect.

3D Systems stock closed down 8.8% on Thursday after falling nearly 12% at one point. The apparent reason: 3D Systems reported a GAAP loss of $0.19 per share and a pro forma loss of $0.03 per share -- both far short of the $0.01 per share profit that Wall Street had predicted it would earn.

3D printer

Image source: Getty Images.

So what

Worse than the miss per se, 3D reported that losses for its first fiscal quarter of 2018 were roughly twice as bad as it experienced one year ago. And yet, saleswise, 3D's Q1 2018 revenue grew 6% year over year, to $165.9 million, beating analyst expectations.

In fact, "revenue" was the one thing about 3D's results that its CEO Vyomesh Joshi said he was "pleased" with this past quarter. "Printers, healthcare and software" contributed to the improvement in sales, said the executive. "The company reported 24 percent higher printer revenue on 44 percent higher printer unit sales as well as growth in software, on demand manufacturing and healthcare solutions."

Unfortunately, gross profit margins on those sales declined significantly, falling 440 basis points, to 46.9%.

Now what

Despite this early decline in profits per revenue dollar, Joshi insisted that "2018 is a corner-turn year in our multi-year turnaround." And while he did not give guidance for what the company hopes to earn this year, Wall Street analysts are looking for a $0.15 per-share profit.

Then again, they were looking for a profit in Q1, too... and didn't find it.

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