What happened

Deja vu. Shares of 3D Systems (DDD -1.40%) were up 16.4% in October, according to data from S&P Global Market Intelligence, which is exactly the same percentage they gained in September.

Even with two consecutive months of strong performance, the 3D printing stock is still down 5.8% in 2019 through Nov. 1. 

For context, the S&P 500 returned 2.2% last month and has returned 24.4% so far in 2019.

Arrow pointing upward on a chart.

Image source: Getty Images.

So what

We can attribute 3D Systems stock's robust performance last month largely to the company's Oct. 30 release of third-quarter results that beat Wall Street's expectations on both and top and bottom lines. Shares popped 8.3% the following day, which likely came as a pleasant Halloween surprise to many investors since the market's initial reaction was moderately negative, as it sent shares tumbling 4.6% in after-hours trading on Wednesday. 

In Q3, revenue declined 5.6% year over year to $155.3 million, topping the $151.1 million analysts had been anticipating. While 3D printer revenue is still moving lower -- it fell 17.2% year over year -- materials revenue resumed growing -- it was up a modest 2.8% year over year -- which is a notable positive because materials sport high profit margins. Adjusted for one-time items, the company posted a loss of $0.04 per share, compared with earnings per share of $0.02 in the year-ago period. While that bottom-line result is hardly anything to cheer about, it did manage to beat the loss of $0.05 per share that the Street had been projecting. 

Now what

On the earnings call, CFO Todd Booth said the company expects mid-single-digit sequential revenue growth in the fourth quarter. This is soft guidance, as the fourth quarter is usually a notably stronger quarter than the third quarter. Booth prefaced the light guidance by referencing "the ongoing macroeconomic challenges and persistent headwinds that we have been facing." 

He added that management expects profitability, on an adjusted basis, in the first half of 2020.

While there are some reasons to be optimistic about 3D Systems' turnaround, investors should remain cautious. After all, this is an unprofitable company whose revenue is still declining.