Why 3D Systems (DDD) Dropped on Monday

NEW YORK (TheStreet) -- 3D Systems (DDD) reversed Friday's gains, dropping 4.3% to $92.27 during Monday's trading session.

The three-dimensional printing company popped last week after announcing it had acquired Gentle Giant Studios, a company specializing in printing 3d toys and entertainment.

However, a short call by hedge fund manager Whitney Tilson has set the stock up for losses. Over the weekend, Kase Capital's Tilson reiterated in an email posted on ValueWalk.com that the company would likely fall 90% to his price target of $10.

TheStreet Ratings team, however, reiterates 3D SYSTEMS CORP as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate 3D SYSTEMS CORP (DDD) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, growth in earnings per share, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 49.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 4.40, which clearly demonstrates the ability to cover short-term cash needs.
  • 3D SYSTEMS CORP has improved earnings per share by 6.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, 3D SYSTEMS CORP increased its bottom line by earning $0.47 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.47).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Computers & Peripherals industry average. The net income increased by 30.6% when compared to the same quarter one year prior, rising from $13.52 million to $17.66 million.
  • Net operating cash flow has increased to $31.64 million or 39.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.84%.
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