Why 3D Systems (DDD) Stock Is Down Today Despite Reporting Positive Earnings

NEW YORK (TheStreet) -- 3D Systems (DDD) shares are down -4.9% to $46.90 following the release of the company's first quarter earnings report on Tuesday.

The 3-D printing company posted a year over year quarterly revenue increase of 45% to $147.8 million, beating analysts consensus estimates of $145.5 million in revenue.

The company also posted Non-GAAP net income of $15 million, or 15 cents per share, in line with analysts guidance.

However, though revenue from 3-D printer sales increased 53% to $60 million, organic growth for the quarter fell 28% from the previous quarter.

Additionally, the company reported a backlog of $17.9 million in printer orders that it could not fill due to manufacturing capacity.

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TheStreet Ratings team rates 3D SYSTEMS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate 3D SYSTEMS CORP (DDD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 analysis by TheStreet Ratings Team goes as follows:

  • DDD's very impressive revenue growth greatly exceeded the industry average of 4.1%. 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 47.22%, 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.
  • You can view the full analysis from the report here: DDD Ratings Report
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