3D Systems (DDD) sees 2013 earnings increase sharply and is a Zacks #1 Rank (Strong Buy).
3D Systems Corporation, through its subsidiaries, engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. The company's principle print engines comprise stereolithography, selective laser sintering, multi-jet modeling, film transfer imaging, selective laser melting, and plastic jet printers. 3D Systems Corporation was founded in 1986 and is headquartered in Rock Hill, South Carolina.
3D Systems Has Four Straight Positive Surprises
3D Systems has topped the Zacks Consensus Estimate in four straight quarters. The beats have been very strong, with the company posting earnings that are $0.08 higher on average. The average beat for 3D Systems works out to be nearly 60%, which might make you think the stock would react positively. That is not the case, with investors selling more than buying in two of the four beats which brought the average price impact to just less than zero.
The biggest price impact came following the December 2011 quarter, the stock rose more than 15% following a 56% positive earnings surprise. The company reported earnings of $0.25, $0.09 more than the Zacks Consensus Estimate. Revenues of $70 million were approximately $6 more than the Zacks Consensus Estimate and represented a 34% increase from the year ago period.
3D Systems Most Recent Reported Earnings
On April 26, 2012 3D Systems reported revenue of $78 million, roughly $7 million higher than the Zacks Consensus Estimate and up from $48 million reported in year ago quarter, an increase of 62%. In addition, earnings per share came in at $0.23, $0.10 higher than the Zacks Consensus Estimate of $0.13. The beat of 77% pushed the stock higher by 3.6% in the session following the release.
3D Systems Sees Estimates Moving Higher
3D Systems has seen earnings estimates move higher following the recent positive earnings surprise. The Zacks Consensus Estimate for 2012 was as low as $0.79 prior to the most recent earnings and has since moved to $1.00. That represents an increase of more than 26.5%.
Estimates for 2013 have also seen an increase following the most recent quarterly release. The Zacks Consensus Estimate for 2013 stood at $0.76 when 2012 estimates were calling for $0.79, but have since moved to $1.17. The increase of 48% for 2013 is just what aggressive growth investors look for, steady increases in future expectations for earnings. The implied growth rate of earnings of 17% is a little less than what you might expect, but with 2013 earnings estimates increase, that growth rate is likely to expand.
The valuation for 3D Systems is well above the industry average on most of the metrics that aggressive growth investors look to. The forward PE multiple of 27x is more than double the 12x industry average, and the trailing twelve months PE of 29x is just less than double the industry average of 16x. Price to book is closer to being in line with the industry at 5x compared to 4.4x, while price to book sports another double of the industry average at 5x for 3D Systems and 2.5x industry average.
A quick look at the price and consensus chart shows the dramatic growth in expected earnings. But that growth is not without a bump in the road. 2013 estimates did see a decline, and that is not something we like to see, but it has since moved sharply higher. With a premium valuation and some large increases in recent 2013 estimates, 3D Systems is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
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