3D Systems' Shares, Post-Earnings, Still Look Too Risky
NEW YORK (TheStreet) -- The direction the 3-D printing industry is headed is unclear, and waiting for a leader to emerge has caused investors in 3D Systems (DDD) - Get Report a lot of pain, as the stock has fallen 60% during the past year.
After the company reported on Thursday fourth-quarter earnings and revenue below analysts' estimates, investors risk further losses.
Yet 3D Systems' shares were up 2.5% to $30.76 Thursday afternoon. Earlier in the day, they traded as high as $32.40, as the company projected a higher profit for this year, saying its "investment phase" has been completed, which suggests lower costs in the quarters ahead.
"We are in the early innings of mainstreaming adoption for our products and services," CEO Avi Reichental said in a statement. "The effective and disciplined investments we have made over the past 15 months position us extremely well for the open-ended opportunities in front of us."
3D Systems, however, faces competition from Stratasys (SSYS) - Get Report and possibly from Hewlett-Packard (HPQ) - Get Report , which is expected to release its own 3-D printer next year.
Meanwhile, shares of 3D Systems trade at 157 times this year's estimated earnings of 20 cents a share. Take a look at the chart.
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For the fourth quarter, the company reported a net income of $1.7 million, or 1 cent a share, compared with $11.3 million, or 11 cents a share, a year earlier. On an adjusted basis, which excludes certain one-time gains and costs, earnings were 21 cents a share, compared with analysts' estimates of 25 cents. Revenue rose 21% to $187.4 million, falling short of estimates.
While 3D Systems believes that its investments will pay off more in the future, there are too many unknowns about the 3-D printing industry, especially about the disruptive effect Hewlett-Packard could have.
The smart play would be to buy Hewlett-Packard's stock, which fell 10% on Wednesday after the company reported earnings that missed estimates. The shares trade at 13 times estimated earnings for the company's fiscal year that ends in October, offering a much better value than 3D Systems' stock does. H-P also pays a dividend, whereas 3D Systems doesn't have one.
