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Stock To Watch: 3D Systems (DDD) In Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified 3D Systems ( DDD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified 3D Systems as such a stock due to the following factors:

  • DDD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $251.3 million.
  • DDD has traded 156,926 shares today.
  • DDD is down 3.5% today.
  • DDD was up 5% yesterday.

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More details on DDD:

3D Systems Corporation, through its subsidiaries, operates as a provider of 3D printing centric design-to-manufacturing solutions in the United States, Germany, the Asia-Pacific, and other European countries. DDD has a PE ratio of 110.2. Currently there are 10 analysts that rate 3D Systems a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for 3D Systems has been 5.9 million shares per day over the past 30 days. 3D Systems has a market cap of $5.0 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.65 and a short float of 30.6% with 5.71 days to cover. Shares are down 48.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates 3D Systems as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, premium valuation and weak operating cash flow.

Highlights from the ratings report include:

  • DDD's very impressive revenue growth greatly exceeded the industry average of 4.2%. Since the same quarter one year prior, revenues leaped by 52.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although DDD's debt-to-equity ratio of 0.02 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.97, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, DDD's share price has jumped by 31.77%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Computers & Peripherals industry and the overall market, 3D SYSTEMS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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